[Steinbock_ma]

Dear All,

Around a month ago, I signed a contract on a single family home, the builder contract called it a single residence and since then I have been working on my mortgage, so recently the appraisal requested by the lender came back stating that the value is around 5K higher than the selling price, area is 80 sqft lesser than what its listed in the contract and the most important thing is that the home is a site condo and not a single family home, so now my lender says since its a condo, I will be loosing the discounts they offered me and the lender fees will increase from $800 to $3200, I'm completely shocked and don't know what to do at the moment...I'm supposed to close this home in 2 weeks and I'm not prepared for the additional increase in the lender fees...Pls help me with your advice.

[canudigit]

I'm no real estate lawyer, but I would think that if you have a copy of the sales contract describing the property as a single family home and also have a copy of the document given to the lending instution that refers to it as a condo and the former predates the latter, then it is a clear case of misrepresentation on the part of the builder and he would be liable for the additional fees. But again, I'm no lawyer. I would consult one if the builder refuses to admit his mistake, lie, or whatever it was.

[jackmichigan]

So...I can only assume that you had neither an attorney or real estate agent to assist you with this purchase. Correct? Now it sounds like it's time to get a good real estate attorney to review your documents. Maybe there's an out for you so that you can back out of the contract and get your deposit back.

It sounds like they misrepresented the property--but they probably covered their tails by having something hidden in the mountain of paperwork. Had you read everything carefully, there's probably something in there that should have alerted you to this being a condominium. Was there not any mention of a condo or homeowners association? I have friends who bought a site condo but they clearly realized that they were buying a condo. (By the way, their original HOA fee went up tenfold after the builder was done with the subdivision and was no longer in charge of the HOA. And with a site condo, you get virtually no services; just the headaches of having an HOA board telling you what you can and cannot do.)

Many builders will try to argue that a site condo is just as good as a regular single family home, but they're wrong. The state legislature did a big disservice to the public by allowing site condos to begin with. Site condos were authorized not that long ago simply to make it easier for developers to create housing developments. It was meant to be quicker than going through the regular platting process for a subdivision.

Does your contract have a financing contingency? (If you used a contract provided by the builder, it's probably weighted in their favor--another reason to at least use an attorney.) Also, I wouldn't trust any appraisal. As opinions of value, they can be good estimates, but they do not necessarily reflect what you might be able to sell the house for on the open market--especially with new construction. My friends' site condo has gone down considerably in value since they bought it, partly due to the fact that they bought it "pre-bubble"; and partly because condos generally aren't as good of investments compared to traditional single family homes around here.

Good luck.

[teachbeach]

Real estate attorney..as fast as you can secure one.

[magellan]

Originally Posted by Steinbock_ma

Dear All,

Around a month ago, I signed a contract on a single family home, the builder contract called it a single residence and since then I have been working on my mortgage, so recently the appraisal requested by the lender came back stating that the value is around 5K higher than the selling price, area is 80 sqft lesser than what its listed in the contract and the most important thing is that the home is a site condo and not a single family home, so now my lender says since its a condo, I will be loosing the discounts they offered me and the lender fees will increase from $800 to $3200, I'm completely shocked and don't know what to do at the moment...I'm supposed to close this home in 2 weeks and I'm not prepared for the additional increase in the lender fees...Pls help me with your advice.

A "site condo" is just a single family development, using a newer way of getting a plat/neighborhood approved as jackinmichigan described. They actually provide more protections for homeowners than an old style platted neighborhood, but that's a debate for another day.

When you purchase the home, you should have been given a copy of the Bylaws, Master Deed, and Condominium Buyers Handbook. You also have 9 days right of rescission in Michigan on a condominium or site condominium. But it sounds like you're outside of that window.

Start reading this:

http://www.michigan.gov/documents/la...3_424175_7.pdf

There may actually be a chance that the builder didn't know the neighborhood was a site condo, if he/she bought a lot and wasn't involved in the development. Most small builders know how to build and don't necessarily understand real estate law. But that doesn't excuse the builder from his/her obligations to disclose this "condition."

Also, I don't know why the lender is jacking up their fees for a site condo. I've never heard of that.

Talk to an attorney. I have pretty good hope that a judge would let you out of the contract since the builder did not disclose the site condo and did not provide you with condo docs.

[magellan]

Originally Posted by jackmichigan

So...I can only assume that you had neither an attorney or real estate agent to assist you with this purchase. Correct? Now it sounds like it's time to get a good real estate attorney to review your documents. Maybe there's an out for you so that you can back out of the contract and get your deposit back.

It sounds like they misrepresented the property--but they probably covered their tails by having something hidden in the mountain of paperwork. Had you read everything carefully, there's probably something in there that should have alerted you to this being a condominium. Was there not any mention of a condo or homeowners association? I have friends who bought a site condo but they clearly realized that they were buying a condo. (By the way, their original HOA fee went up tenfold after the builder was done with the subdivision and was no longer in charge of the HOA. And with a site condo, you get virtually no services; just the headaches of having an HOA board telling you what you can and cannot do.)

Many builders will try to argue that a site condo is just as good as a regular single family home, but they're wrong. The state legislature did a big disservice to the public by allowing site condos to begin with. Site condos were authorized not that long ago simply to make it easier for developers to create housing developments. It was meant to be quicker than going through the regular platting process for a subdivision.

Does your contract have a financing contingency? (If you used a contract provided by the builder, it's probably weighted in their favor--another reason to at least use an attorney.) Also, I wouldn't trust any appraisal. As opinions of value, they can be good estimates, but they do not necessarily reflect what you might be able to sell the house for on the open market--especially with new construction. My friends' site condo has gone down considerably in value since they bought it, partly due to the fact that they bought it "pre-bubble"; and partly because condos generally aren't as good of investments compared to traditional single family homes around here.

Good luck.

We've built 3 homes in site condo developments and none of them have raised their fees 10 fold after the builder was finished. The one we're in currently raised theirs about 80% from when we first moved in, from $120/year to $200/year.

The reason why site condominiums were instituted (in addition to being easier than platting) was so that municipalities could push a lot of neighborhood maintenance to the neighborhood itself. In a platted subdivision, all the streets and sidewalks have to be maintained by the city or county, which was crushing municipality budgets. With site condos they can make the streets a mix of public and private. It also gave municipalities the ability to require more from the developers in the way of greenspace (a lot of cities over here require 30% greenspace in a residential development, something that could not be done in the old subdivision system), or to set it up as a PUD (Planned Unit Development) which would require a certain percentage to different uses (residential, commercial, retail).

Hope that helps.

[Steinbock_ma]

Thanks for all the quick responses, I shall look for a real estate attorney.

*The contract says "The builder shall provide or caused to be provided for the purchase of all the materials, labor and supervision for the erection and completion in accordance with the contract documents as defined below and also described as xxxx elevation, single residence, hereinafter referred to as the "Residence", on land in XX township, County of XX state of michigan, described as unit XX, to be otherwise known as address XXXX, XX MI, herein referred to as the unit."

Lender actually didn't increase the prices, he just cancelled all the discounts I was receiving. So that increased the price by $2400.

I'm beyond the 9 day of signing the contract and as per the contract the deposit is non refundable.

[Jswee]

As Magellan pointed out, the fact that it is a site condo refers to the lot it's built on, not the structure that is built on it. You can build a single family home on a lot that is a site condo. Site condo developments are quicker and easier for the developer to put together because it allows them to avoid the rigorous and expensive requirements that are required for a subdivided development. Site condo's bypass the requirements of the subdivision control act. I would have no qualms about building a home on a site condo lot, the differences between site condo lots and platted lots are pretty minimal from the end user standpoint.

[Steinbock_ma]

Yes I will talk to a real estate attorney. In the entire negotiation process there was never a mention of the word condo. It really doesn't bother me that its a site condo, what bothers me at this moment is the increase in the lender fees.

I shall also talk to the lender to see if they would consider the home as a form of single residence and give back the discounts.

[magellan]

Originally Posted by Steinbock_ma

Yes I will talk to a real estate attorney. In the entire negotiation process there was never a mention of the word condo. It really doesn't bother me that its a site condo, what bothers me at this moment is the increase in the lender fees.

I shall also talk to the lender to see if they would consider the home as a form of single residence and give back the discounts.

When you talk to the attorney, ask if the disclosure laws regarding the Michigan Condominium Act apply to a builder if the builder was not the developer. If the builder still has to disclose the site condo status, the 9 days right of rescission begins when you RECEIVE ALL OF THE CONDO DOCS, (which it sounds like you haven't gotten yet) not when you signed the purchase agreement. There's still hope.