Why VA condo approval matters — a Davis Islands deal that almost died

Davis Islands has high VA condo approval density given MacDill proximity. Most major buildings are on the list. This particular project — a 1980s mid-rise on the Riverside side — had been approved through 2018, then renewal documentation got stuck in the HOA's transition between management companies. Project lapsed.

Lapse vs. denial is a critical distinction. A LAPSED project usually re-approves cleanly because the underlying financials, owner-occupancy ratios, and litigation history are unchanged from the prior approval. A DENIED project failed at least one of the VA's structural tests and often can't recover quickly.

Lapsed projects are good candidates for spot approval. The lender's confidence on day 1 was reasonable. What wasn't reasonable was assuming 'two weeks.'

Spot approval requires the HOA to provide updated documentation: current budget, reserve study, owner-occupancy percentage, litigation disclosure, single-investor concentration calculation, commercial-space ratio, insurance certificates.

Day 1: lender requested the package from the HOA management company.

Day 8: HOA hadn't responded. Property manager was on vacation.

Day 14: package received but missing the reserve study and the owner-occupancy data.

Day 21: missing pieces submitted. Lender forwarded to VA regional office.

Day 28: VA flagged the owner-occupancy ratio at 49% (just under the 50% threshold for full approval). Sent back for clarification.

Day 35: HOA recalculated, came back at 51% (a few investor units had recently sold to owner-occupants). Re-submitted.

Day 41: VA issued spot approval. Closing scheduled for day 47.

Three things kept it alive past day 30:

1. The contract was written with a contingency for 'lender approval, including condo project approval, with extension as needed.' Standard FAR/BAR language but specifically called out the condo piece. The seller had to grant extensions but couldn't terminate cleanly.

2. The seller wanted a clean VA close, not a re-list. Re-listing at the same price after a contract failure damages perceived value. Sellers usually grant extensions when the alternative is starting over.

3. We kept communication open. Weekly seller updates. The buyer wrote a letter explaining the active-duty timeline. Soft factors that shouldn't matter — but on day 35 when the seller was within their right to terminate, those things kept the deal alive.

Always check VA approval status BEFORE writing the offer. Five minutes at lgy.va.gov/lgyhub/condo-report. Can save you 30-60 days.

If the project IS approved, confirm the approval expiration date. Approvals last 5 years and lapse silently if not renewed.

If the project is NOT approved, ask the lender to do a quick pre-screen of the project's likely spot-approval prospects BEFORE you go under contract. Some lenders will look at owner-occupancy ratio and litigation status preliminarily and tell you 'yes likely' or 'no likely' in 24 hours.

Build extension language into the contract. Florida FAR/BAR contracts allow flexible contingency periods — use them on condos where the timeline isn't fully predictable.

Have a backup unit identified. If spot approval fails 30 days in, you've burned 30 days and your earnest money is at risk. A pre-vetted backup in an already-approved project recovers the situation.