Recreational Lease Condo Lenders In Florida

Florida Recreational Lease Condo Lender

Florida mortgage for condos with Recreational Lease

Condos rec lease Mortgage Lenders in Florida refinance or purchase Florida condos with a recreational lease. Definition: A recreational lease (sometimes known as a “rec lease”) is a situation where the ownership and management of recreational facilities (like clubhouses, parking lots, pools, gyms) within a condominium complex are leased separately from the Florida condominium association. Rec lease Florida Condo owners pay mortgage payments, maintenance dues, and recreational lease dues to an independent entity that owns and manages the recreational facilities. Potential buyers must understand the recreational lease terms and financial implications of such leases before purchasing a condo with recreational lease property.

Primary Condos With Recreational Leases 

o Max LTVs for Recreational Lease Florida condo approvals are as follows:
 Maximum 80% LTV up to $1,000,000 = 20% downpayment.
 Maximum 75% LTV for $1,000,000 – $2,000,000 = 25% downpayment.
 Maximum 70% LTV for $2,000,000 + = 30% downpayment. 

Some recreational lease Florida condo lenders have reserve requirements. Mortgage reserves, also known as cash reserves, are funds a Florida condo recreational lease homeowner needs to have available after closing on a mortgage to cover potential unexpected expenses or income fluctuations. These reserves act as a financial cushion, helping to ensure the condo owner can make their condo mortgage payments even if they encounter difficulties like job loss or illness. Reserves range from 4-12 months. All information is subject to change. 

 Recreation Lease Mortgage Approvals
Florida Condominium recreation leases will be reviewed on a case-by-case basis. Generally, the lease must be subordinate to the mortgage and the term must equal or exceed the term of the loan. Required documentation include a copy of the lease and confirmation how the lease payment is made (typically paid through HOA). Additional documentation may be required.
• This product guide describes the Florida condo mortgage for condos with recreational leases. 
o Fully Amortizing 30-year fixed, 3/1, 5/1, and 10/1 Treasury ARMs
• All loans must be manually underwritten and fully documented.
•The loan is subject to a Pre-Close Eligibility review completed before final approval.
• All loans must close in the United States.
• Before the loan is registered, the customer must submit their scenario to their Account Executive (AE). The
AE will submit the information to the TPO scenario desk for review. The scenario documentation will be sent to
The investor for further review before loan registration to ensure the scenario is viable. Please allow 48 hours
for review. The scenario review requires the following documentation:
o Completed Recreational lease condo mortgage application. 
o 1008
o URLA (all assets must be listed on URLA)
o Credit Report

Condominium Rec Lease Questions 

Q: What exactly is a recreational lease condo? A: It’s a long-term lease agreement for Florida condos (often 50 to 99 years) for the use of the condominium’s recreational amenities. Florida condominium unit owners typically pay a separate fee for the use, in addition to their regular monthly condo association fees, to use these facilities. This fee is essentially rent paid to the owner of the recreational facilities.

Q: Who owns the recreational facilities in a rec lease condominium? A: Typically, the original developer or a related entity retains ownership of the land and the condominium recreational facilities built on it. They then act as the lessor, leasing these facilities to the Florida condominium association or directly to the unit owners.

Q: How does a condo recreational lease affect the owners financially? A: Florida condo recreation lease owners are obligated to pay the fees associated with the lease; these fees are usually paid on a monthly or annual basis. These fees are in addition to their regular Florida condominium association dues, which cover the maintenance and operation of the common elements owned by the association. Florida Recreational lease condo fees can be a significant ongoing expense to the condo owners.

Q: Can the rent in a recreational lease change over time? A: Yes, most condominium recreational leases include escalation clauses that allow the rent to increase over the term of the lease. These increases are often tied to a specific index, such as the Consumer Price Index (CPI), or may have fixed percentage increases at predetermined intervals. The Florida condo rec lease escalation law has since prohibited escalation clauses tied to a price index in new recreational leases for residential communities. However, this doesn’t affect rec lease Florida condos’ pre-existing leases.

Q: Are recreational leases common? A: Recreational leases are common in Florida, particularly during the condominium boom in the 1960s and 1970s. While less common in newer developments, many existing rec lease Florida condominiums still operate under these types of leases.

Q: Are there any laws protecting condo owners regarding recreational leases? A: Florida law has addressed some concerns related to recreational leases over time. For example, there are provisions regarding the disclosure of these leases to potential buyers and the right of the association to purchase the leased facilities under certain conditions. Additionally, as mentioned earlier, escalation clauses tied to price indexes are now prohibited in new leases for residential communities.

Q: How can I find out if a condo has a recreational lease? A: Information about a recreational lease should be disclosed in the condominium’s declaration of condominium and other governing documents, which are part of the public record. Prospective condo buyers should carefully review these documents before purchasing a recreational lease condo unit. Real estate agents are also typically aware of whether a property is subject to a recreational lease. The Broward County Property Appraiser’s website also has FAQs that mention land or recreation leases and their effect on tax assessments.

Q: Can a Florida condominium association buy out a recreational lease? A: Yes, in many cases, the recreational lease agreement may grant the condominium association an option to purchase the leased property. Sometimes, Florida law also provides the association with the right of first refusal if the lessor decides to sell the facilities. The purchase typically requires approval by a certain percentage of the unit owners.

Q: What are the potential drawbacks of a recreational lease for Florida condo owners? 

• Resale Issues: Florida recreational lease condos with rec leases can sometimes be less attractive to potential buyers due to the ongoing fees, potential for rent increases, and lack of ownership of the amenities. This can sometimes affect property values and the ability to obtain financing.
• Long-Term Obligation: The lease is a long-term contract that binds current and future owners.
• Additional Costs: Owners face an extra layer of fees beyond their regular association dues.
• Lack of Control: Condo rec lease unit owners or the association do not own the recreational facilities and have limited control over their management and upkeep.

Condo With Recreational Lease Coverage Areas