A condo questionnaire is a comprehensive form/questionnaire about a condominium building. When you are buying a condo with a mortgage, your lender will send this condo questionnaire to the sponsor (if they are still managing the building) or the condominium manager to fill.
It includes questions about:
- Basic information about the condominium, including whether it’s finished or still being developed
- Questions about common charges (What they are now and when were they last increased) – This is useful information for buyers as well
- Amendments in the original offering plan
- Building’s original and revised status (whether it started out as condominium or something else)
- Financial information about the building
- How many people living in the building own the condos, and how many are renting them out
Every lender has its own questionnaire, but most of them cover the basics like financials and legal troubles the building may have seen.
Who Uses It And Why It’s Important?
The condo questionnaire is used by the mortgage lender to determine how safe investment is. When a bank gives you a mortgage for a condo, that condo is their collateral, so if you can’t pay back your loan, the bank needs to know if selling the condo will allow them to make up their losses. But if your condo is in a building that has poor financials or legal troubles, the bank (your lender) may not risk lending you money for it.
Many lenders are working with their own money and assume most of the risk by themselves, and they may have more lenient requirements for a condominium building. But many share the risk with Fannie Mae or Freddie Mac, which have their own requirements for mortgage lending.
Mortgage lenders consider condos riskier than single-family homes because those homes come with land which has its own value. So they look at the financial health of the building that the condo is part of to make sure its value will rise with time, not fall.
How Is A Condo Questionnaire Important For Buyer?
While a Condo Questionnaire is used by the lender to vet/check the condominium building, the result of this checking impacts the buyer. Because even if the lender has approved you, it won’t give you a mortgage if it doesn’t find the building you are buying a condo in satisfactory. So you will either need to find a new condo or a new lender that would approve your current condo. It’s usually a lender that has already lent money to other homebuyers in the same building.
If you are taking a mortgage from a lender who already knows about the condominium project and has their updated details on file, the process would be much smoother. Also, you (the buyer) will have to pay for the property manager or sponsor to fill out the condo questionnaire. It’s usually between $200 and $300.