OOB condo communities and beachfront associations

Major associations at a glance

Warrantable vs non-warrantable

Warrantable means the building meets Fannie Mae and Freddie Mac project review standards, which lets a buyer use a conventional or FHA loan with normal terms. Non-warrantable means at least one criterion fails, which pushes financing to non-agency or portfolio products. Travis runs both. Non-agency rates run modestly higher than conventional but the loan still closes; the buyer just needs to know going in.

What kills warrantability

• High investor concentration. More than 50% of units owned by non-occupants typically fails.
• High HOA delinquency. More than 15% of owners more than 60 days behind on dues typically fails.
• Commercial space ratio above 35%. Common in mixed-use Pier buildings with retail on the ground floor.
• Single owner of multiple units. Concentration limits apply.
• Pending litigation against the association involving safety or structure.

Short-term rental rules vary by association

Some associations prohibit any rental shorter than thirty days. Some restrict to monthly minimums. Some allow nightly rentals subject to registration with the association and the town. Read the bylaws and any amendments before you buy if rental income is part of the underwriting; a building that allowed nightly rentals five years ago may have voted in a thirty-day minimum since.

What to pull before contract

• Full association budget for the current and prior year.
• Two years of board meeting minutes.
• Master insurance policy declarations page, including wind and flood coverage detail.
• Rental rules in the bylaws and any amendments.
• Owner-occupancy ratio and investor concentration.
• Pending and recent special assessments.
• Most recent reserve study.

Insurance and the master policy

The association master policy typically covers the exterior, common areas, and depending on the bylaws either bare walls or walls-in coverage of the interior. The owner is responsible for an HO-6 condo policy that picks up the rest, plus contents and liability. Confirm the master policy covers wind separately, and confirm whether flood is included or whether the association carries a separate Flood master. In OOB many associations require unit owners to carry their own flood policy.

Reserve studies

The Maine Condominium Act requires associations to maintain reserves for replacement of common elements. Older associations are sometimes underfunded relative to the recommended reserve schedule, which translates into special assessments when major systems (roof, elevators, seawall, decks) reach end of life. The reserve study tells you what is coming and when.