condo purchase - parking spot separately deeded - mortgage? (loan officer, 401k, approved)

[patrick409]

Hi All,

I'm currently in process of buying a condo. As part of the purchase, I will also be buying a separately deeded parking spot (but negotiated together as a single sale and price).

I've been talking to my loan officer at Chase for the morgage, and apparently Chase doesn't allow the parking spot to be deed separately in order to be rolled in with the mortgage. It needs to be deeded together with the property.

This obviously makes me nervous, as otherwise my financials are fine with to their underwriter and I shouldn't have trouble getting approved for the mortgage amount. (great credit, 20% down payment, dti is fine).

I guess my question is regarding the wording of the parking deed. What difference is there between a separately deeded parking spot and one that is deeded with the property? How is that different than a assigned parking space in shared common elements?

Has anyone ever heard or experienced this?

The loan officer is following up with underwriting with my actual contract and should get back to me in a day or two, but if this is expected to be an issue then I need a head start with applying to other banks for mortgages.

Thanks!

[399083453]

In large cities, many condos have no parking spots because most people don't have cars.

[AZJoeD]

I have seen this situation before, but cannot remember it being an issue (the Loan to Value for it must have been very low). One concern that your lender has is that a separately deeded parking spot could be sold separately from the condo decreasing the value below the LTV threshold for your mortgage.

I do not know if your lender will allow two deeded properties on one loan. Lenders used to allow for 80/20 loans (or something similar), but most of that has gone away. You may have work out separate loans or pay cash for the parking spot.

[Pfhtex]

You might gain better traction talking with the Listing Agent or HOA, as they've likely seen this before, and executed an addendum that made it work. Maybe.

[patrick409]

hmm.. It does make more sense after hearing you guys explain it. I know that the lender has financed other buyers in this condo building (it's a huge building - 500+ units), and the building was completed in 2009 so it wasn't like any of it was pre-2007 mortgages. Hopefully that just means the contract has language in it that makes it work.

It's also possible those buyers had a big enough down payment to cover the parking in full (i.e. LTV being low as AZJoeD mentions..), although it's hard to imagine ALL of them being the case. I don't have quite that much cash without borrowing from my 401K though, and I really don't want to do that.

I guess it's time to start applying to some other local banks and hopefully they have a more lenient policy..

[jackmichigan]

I don't see the problem. A deed is merely the written instrument conveying an interest in real property. A single deed can convey the interest in one property...or it can convey the interest in two or even multiple properties. If a bank is providing a loan for your entire purchase, it would be foolish of them not to make sure that the mortgage encumbered your entire purchase. Doing so with the conveyance being through a single deed is just simpler, and it makes clear that they are holding both properties as collateral. It has no bearing upon whether or not you can later sell the properties independently, after the mortgage is paid off.

The bank just wants to make sure that you don't sell off the parking spot separately, thereby reducing their collateral. I can't imagine any other bank doing otherwise.

[AZJoeD]

Patrick, keep us posted on how this works out.

[patrick409]

My loan officer got back to me - It looks like the purchase contract was written in a way that is acceptable to Chase, so even though the parking spot is deeded separately, there shouldn't be any problems with completing the financing. He didn't go into exact specifics(and I didn't ask), but there are probably a variety of contingencies I have to pass before I can sell the parking spot.

I'll have to get my attorney to find it and explain it to me, but it looks like crisis averted for now.

[M_K_86]

Hi Patrick, did you ever determine how you were able to get around this? I am dealing with the exact same situation now and my financing is in jeopardy. Thanks!

[mml309]

Anyone in Southeast Michigan with knowledge of a fair charge to sell an open parking space in our condo building to a current resident? We've not sold spaces since 2009, and I cannot figure out where to begin. Thanks!