Condominium rider: What is it, why does my lender require me to sign it?

If you're buying a condominium, one of the documents you will be required to sign in connection with your loan is a "Condominium Rider." This rider is an attachment to the document recorded in the land records to secure your loan. In DC, Maryland and Virginia the recorded document is called the Deed of Trust. In Florida, it’s called the Mortgage. I will refer to both as the "Security Instrument." 

In very basic terms, think of the Security Instrument as a document where you're transferring rights in the property you're buying to the lender (or to a trustee for the benefit of the lender) as security for the loan.

The form used for the Security Instrument is geared toward single family homes, so it needs a few changes when the property being purchased is a condominium.

One of the most important items contained in the Condominium Rider is the information regarding condominium fees. You might remember from our post entitled Condo Fees and Closing – Why Do We Care? that lenders have an interest in making sure that condominium fees are paid.

In the Condominium Rider, you agree to comply with all of the condominium rules, including paying all dues and assessments imposed by the condominium. If you do not pay these dues and assessments, the lender may pay them, and any amounts that it pays on your behalf will be tacked on to the loan amount to be paid back by you, with interest.

Another key item contained in the Condominium Rider is a waiver of the property insurance requirements contained in the Security Instrument. Because the Security Instrument is designed for single family properties, it contains requirements regarding obtaining and maintaining property insurance, as those would normally be the homeowner’s responsibility.

In the case of a condominium, the condominium association is responsible for obtaining and maintaining a "master" or "blanket" policy on the condominium project. If this policy is satisfactory to the lender, the Condominium Rider waives the requirements: 1) that the borrower make monthly escrow payments to the lender for insurance and 2) that the borrower maintain property insurance.

Close It! for iPad ready for download

Free mobile app calculates cash to close for homebuyers and cash in pocket for home sellers with great accuracy

Close It! for iPad ready for download

Ever wonder what your total cash to close would be to buy your home? Or how much money you will pocket from the sale of your home? Now there's an app for that.

"Close It! is like Turbo Tax for real estate transactions," said Todd Ewing, president of Federal Title who first conceived of the app last summer. "And the results are accurate within one-tenth of 1 percent on average."

Download the app now >>

Close It! is the first mobile app that produces a complete, picture of cash to close and monthly mortgage payments for homebuyers and cash in pocket for home sellers. It's free to download for iPad.

Title professionals across the country have used technology like this in-house for years now, but Close It! is the first app that makes it easy for homebuyers and sellers to produce a HUD-1 Settlement Statement – such as what would be reviewed and signed at the closing table – right from their mobile device.

Getting started with the app is as easy as entering a purchase or sales price. Then fine tune the results on a live, dynamic worksheet and instantly narrow down cash to close or cash in pocket with great accuracy.

Whether you're shopping for homes or getting ready to sell, calculate your costs right on the spot with Close It!

Save Our Homes in Florida

To homebuyers in Florida: beware of misleading annual property tax assessments when researching homes online.

An amendment to the state constitution known as Save Our Homes, around since 1995, caps annual increases to assessed property value at 3% or the change in the Consumer Price Index – whichever is lower.

When the property changes ownership, the SOH property assessment value expires at the end of that calendar year. The new owner must apply for her own Homestead Exemption, and the property will receive the SOH benefit beginning the second year. I'm paraphrasing this article.

Homebuyers who are unaware of the program may view the annual property tax assessment listed on a real estate website or government database and mistakenly think their property tax assessment will be roughly the same. But in many cases the new assessment will be significantly higher than the old one, resulting in a large jump in annual property taxes that are due.

SOH is only good for homes that are receiving the Homestead Exemption. Rental and investment properties do not qualify. In the majority of cases SOH may not be inherited. If the house is a duplex and 50% is owner-occupied principal residence, only 50% of the property assessment is shielded by SOH.

Florida homeowners enjoy a Homestead Exemption of $50,000 for if their Florida property is their permanent residence, but they must apply for it. That amount is deducted from their property's assessed value and the taxes are based on that lower number. There are a number of other exemptions available ranging from persons with disabilities to veterans to widows and surviving spouses of service members.

Real property tax assessment guide

While all government jurisdictions collect taxes on real property, each does so in its unique way. Collection methods and tax due dates, for example, vary from one jurisdiction to the next.  

To help you navigate real property taxes in the District of Columbia, Maryland, Virginia and counties in Florida where we operate,  we have compiled this list of tax collection & billing offices along with links to property tax assessment pages wherever possible. This information will help you better understand how property taxes work and predict your property tax liability for any given property in that jurisdiction.

Click beyond the jump to continue reading.

South Florida among top markets for buying foreclosures

Although there have been recent concerns about a shortage of homes for sale, South Florida currently ranks among the top 20 markets nationwide in which to buy foreclosures in 2013.

Miami-Dade, Broward and Palm Beach counties rank at No. 12 on the list recently compiled by Realty Trac Inc. Realty Trac’s report analyzed foreclosure inventory in the pipeline, average discounts and other factors for more than 200 metropolitan areas with populations of at least 500,000.

South Florida’s recent ranking is a somewhat of a surprise, given that local real estate agents and buyers have complained about a lack of properties for sale. Inventories of all available properties have fallen by approximately 50 percent in the past year, with many underwater homeowners still unable to sell and others waiting on the sidelines for prices to continue to improve. 

In addition, lenders have generally held off listing foreclosed properties, in part to avoid depressing prices. The limited quantity of homes for sale has led to bidding wars and offers well above asking prices. 

However, as South Florida has one of the nation’s highest foreclosure rates with 1 in 27 homes being in distress, the available inventory of bank-owned homes should likely increase providing further opportunities for investors and end users to acquire South Florida properties at historically low prices. 

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