**§36.4860 Condominium loans---general.**

\(a\) *Authority---applicability of other loan guaranty regulations, 38
CFR Part 36*. A loan to an eligible veteran to purchase a one-family
residential unit in a condominium housing development or project shall
be eligible for guaranty or insurance to the same extent and on the same
terms as other loans under 38 U.S.C. 3710 provided the loan conforms to
the provisions of chapter 37, title 38 U.S.C., except for sections 3711
(direct loans), and 3727 (structural defects). The loan must also
conform to the otherwise applicable provisions of the regulations
concerning the guaranty or insurance of loans to veterans. Sections
36.4857, 36.4859, and 36.4869 shall not be applicable.

\(b\) *Definitions*. On and after July 1, 1979, the following
definitions shall be applicable to each condominium loan entitled to be
guaranteed or insured, and shall be applicable to such loans previously
guaranteed or insured to the extent that no legal rights vested
thereunder are impaired. Whenever used in 38 U.S.C. chapter 37 or this
subpart, unless the context otherwise requires, the terms defined in
this paragraph shall have the meaning stated.

\(1\) *Affiliate of declarant*. Affiliate of declarant means any person
or entity which controls, is controlled by, or is under common control
with, a declarant.

\(i\) A person or entity shall be considered to control a declarant if
that person or entity is a general partner, officer, director, or
employee of the declarant who:

\(A\) Directly or indirectly or acting in concert with one or more
persons, or through one or more subsidiaries, owns, controls, or holds
with power to vote, or holds proxies representing, more than 20 percent
of the voting shares of the declarant;

\(B\) Controls in any manner the election of a majority of the directors
of the declarant; or

\(C\) Has contributed more than 20 percent of the capital of the
declarant.

\(ii\) A person or entity shall be considered to be controlled by a
declarant if the declarant is a general partner, officer, director, or
employee of that person or entity who:

\(A\) Directly or indirectly or acting in concert with one or more
persons or through one or more subsidiaries, owns, controls, or holds
with power to vote, or holds proxies representing, more than 20 percent
of the voting shares of that person or entity;

\(B\) Controls in any manner the election of a majority of the directors
of that person or entity; or

\(C\) Has contributed more than 20 percent of the capital of that person
or entity.

\(2\) *Condominium*. Unless otherwise provided by State law, a
condominium is a form of ownership in which the buyer receives title to
a three dimensional air space containing the individual living unit
together with an undivided interest or share in the ownership of common
elements (restatement of §36.4801, Condominium).

\(3\) *Conversion condominium*. Condominium projects not originally
built and sold as condominiums but subsequently converted to the
condominium form of ownership.

\(4\) *Declarant*. Any person who has executed a declaration or an
amendment to a declaration to add additional real estate to the project
or any successors or assigns of the declarant who offers to sell or
sells units in the condominium project and who assumes declarant rights
in the project including the right to: Add, convert or withdraw real
estate from the condominium project; maintain sales offices, management
offices and rental units; exercise easements through the common elements
for the purpose of making improvements within the condominium; or
exercise control of the owner's association. Declarant is further
defined as any sponsor of a project or affiliate of the declarant who is
acting on behalf of or exercising the rights of the declarant.

\(5\) *Existing---declarant in control or marketing units*. A
condominium in which all onsite or offsite improvements were completed
or the conversion was completed prior to appraisal by the Department of
Veterans Affairs, but the declarant is in control of the owners'
association and/or is currently marketing units for initial transfer to
individual unit owners.

\(6\) *Existing---resale*. A condominium in which all onsite or offsite
improvements were completed, or the conversion was completed prior to
appraisal by the Department of Veterans Affairs, and the declarant is no
longer in control of the owners' association and/or marketing units for
initial transfer to individual unit owners.

\(7\) *Expandable condominium*. A project which may be increased in size
by the declarant. An expandable condominium is constructed in phases (or
stages). After each phase is completed and constituted, the common
estates are merged. Each unit owner, thereby, gains an individual
interest in all of the facilities of the common estate.

\(8\) *Foreclosure*. Foreclosure shall mean the termination of a lien by
either judicial or nonjudicial procedures in accordance with local law
or the voluntary transfer of property by a deed-in-lieu of foreclosure
or similar procedures.

\(9\) *High rise condominium*. A condominium project which is a
multi-story elevator building.

\(10\) *Horizontal condominium*. A condominium project in which
generally no part of a living unit extends over or under another living
unit.

\(11\) *Low rise condominium*. A condominium project in which all or a
part of a living unit extends over or under another living unit, e.g.,
garden apartment or walk-up project.

\(12\) *Proposed condominium*. A condominium project that is to be
constructed or is under construction. In the case of a condominium
conversion, the declarant proposes to convert a building or buildings to
the condominium form of ownership, or the declarant is in the process of
converting the building or buildings to the condominium form of
ownership.

\(13\) *Series condominium*. A number of adjoining but separately
constituted condominiums. An association of owners is established for
each project, and each association is responsible for maintenance and
upkeep of the common elements in its own project. Cross-easements
between the separate condominiums may be created to permit members of
the separate condominiums to use the common areas of the other
condominiums.

\(c\) *Project approval*. Prior to Department of Veterans Affairs
guaranty of an individual unit loan in a condominium, the legal
documentation establishing the condominium project or development must
be approved by the Secretary. (Authority: 38 U.S.C. 3703(c)(1), (d)(3),
3710(a)(6))