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#2253090 - 04/28/21 12:57 AM Transient Property???
Tonya Cannon, CRCM Offline
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Joined: Oct 2015
Posts: 6
If a business entity is purchasing a single-family residence to be exclusively rented out as a nightly rental, is this transient and therefore not reportable? The argument is that it functions the same as a hotel room. Our typical deal is a second/vacation home that will be rented sometimes, but we are starting to see requests specifically for this type of scenario.

Can we take the business owner's word that it will not be for personal use (though, the borrower is an entity, not a person) by the guarantors?
Does the answer change if the borrower is an individual purchasing the nightly rental property?

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#2253157 - 04/28/21 08:21 PM Re: Transient Property??? Tonya Cannon, CRCM
Compliance NABW Offline
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Joined: Oct 2015
Posts: 1,486
That would be my understanding, yes. This home would not be considered a "dwelling." You wouldn't really have anything else to go off of other than the statement of purpose and discussions with the borrower. So, yes, you basically take their word for it. Individual vs. business wouldn't change anything here.

3. Exclusions. Recreational vehicles, including boats, campers, travel trailers, and park model recreational vehicles, are not considered dwellings for purposes of ยง 1003.2(f), regardless of whether they are used as residences. Houseboats, floating homes, and mobile homes constructed before June 15, 1976, are also excluded, regardless of whether they are used as residences. Also excluded are transitory residences such as hotels, hospitals, college dormitories, and recreational vehicle parks, and structures originally designed as dwellings but used exclusively for commercial purposes, such as homes converted to daycare facilities or professional offices.

It is basically being used like a hotel.

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#2253239 - 04/29/21 07:33 PM Re: Transient Property??? Tonya Cannon, CRCM
Tonya Cannon, CRCM Offline
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Joined: Oct 2015
Posts: 6
Follow-up. Would you consider the collateral a dwelling for call reporting purposes or commercial property? This is often a struggle for our lenders, some like to call ALL rentals commercial property because they are income producing.

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#2253447 - 05/04/21 06:22 PM Re: Transient Property??? Tonya Cannon, CRCM
Compliance NABW Offline
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Joined: Oct 2015
Posts: 1,486
For Call Report purposes, it is still a 1-4 Family Residential Dwelling. I would put it in RC-C Part 1 Item 1c.

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