Category Archives: Buying

Condo Let Lapse FHA and VA Certification

C.W. from New Haven County writes:

Dear Mister Condo,

Our complex has always maintained FHA/VA certification. This certification certainly can be viewed as either a positive or negative by some. As I understand it, last fall the government separated the two, requiring two separate certifications. My complex let the certification lapse and then chose only to renew the FHA certification. Now, the FHA cert costs about $1800 with attorney’s fees and is only good for a limited time (I believe 2 years), the VA certification is a lifetime certification and a one-time expense of approximately the same amount. There was nothing in our complex financials reflecting payment or budget for either. There was no notification from the board regarding maintaining or dropping either. I only found this out because I had put my unit for sale and was notified of the lack of certification. After going to the Board, they said they were unaware of the separation of certifications. I lost my first buyer because it was during the lapse of either, and then lost my second buyer because of the non-VA renewal. The board originally asked if I would front the cost and they would reimburse me at the closing, which I agreed. They then reneged and asked me to pay half, then they said they would not reimburse me at all but would supply the attorney with the paperwork. I have lost both buyers because of this. I am now 4 months later with no buyers and multiple price drops. Do I have some sort or recourse because of the lapse and non-renewal and no notification or owner vote regarding this? Certainly, I would think that this certification has a reflection on our unit value. Thanks.

Mister Condo replies:

C.W., I am certainly sorry that you have lost a few buyers for your unit while this debacle unfolds. I should point out that I am not an attorney and offer no legal advice in this column. You should speak with qualified counsel to see if you have any type of legal remedy worth pursuing. You are correct to point out that there are differences between FHA and VA certification. Generally speaking, FHA certification is required for the condominium association for any mortgages that are FHA insured (most are these days). VA certification is specific to the VA-backed loan program and has a different set of requirements. If your complex had VA certification at one time, I am not sure how they lost it. FHA certification is a renewable program so it does have to be sought and reapplied for from time to time as required by the FHA. To optimize mortgage opportunities, many condominium associations opt for FHA certification. Not all bother with VA certification as it is a much narrower pool of buyers who require such certification. Neither are required to be carried by the association, which is why I question your ability to claim an association-caused loss because of the lack of the certification. Your pool of potential buyers is certainly smaller without the FHA certification but you are still unencumbered by the association when you do sell. The Board should take the best interests of all unit owners into consideration when deciding to renew or let lapse FHA certification. Ultimately, if the unit owners want it and the Board refuses to get it, it is time for a new Board. All the best!

Timing of Special Assessment Hampers Condo Unit Sale

W.L. from outside of Connecticut writes:

Dear Mister Condo,

My condo is under contract and set to close very soon. I just received a notice about a week ago of a meeting of the owners to approve/disapprove an assessment of $750,000 ($7,500/unit). I immediately notified the buyer’s agent and invited the buyer to attend the meeting. The assessment was approved last night (the buyer was out of town… supposedly). Is the buyer obligated to close? Note: I am willing to finance the $7,500 amortized over 3 years. Note 2: Closing attorney says buyer is obligated to close because he will ‘enjoy’ all the benefits of the expenditure.

Mister Condo replies:

W.L., congratulations on selling your unit. Special Assessments are ugly for so many reasons. The timing of this one as you are selling your unit is almost calamitous. The liability for the assessment is with the unit owner of record when the assessment was levied. So, depending on when the closing date and time and transfer of deed for your unit occurred, the assessment is on the unit owner of record at that time. The purchase and sale agreement you have with the new owner is a separate entity and your attorney can best advise you on what legal options you have if the buyer breaks that agreement, for whatever reason. So, in the simplest of terms, look at the date and time the assessment was levied. Look at who owned the unit at the date and time of the assessment. That is who owns the assessment. As for offering to finance the assessment for the new buyer, that is a decision you need to make. Personally, I would not offer that option as it isn’t your problem, but very well could be if the unit owner defaults on the repayment. Then you will need your attorney for a whole other reason. Good luck!

Purchasing a Condo Parking Space

B.W. from Tennessee writes:

Dear Mister Condo,

I currently own two condos in Knoxville. The building is adjacent to a university and I purchased the condos for my kids to live in while in college. Each came with one deeded parking place. When the building was originally sold, buyers could choose to purchase an additional parking place. One owner who did so recently sold his unit and wants to sell his extra parking place. We have agreed on a price and I need to find a bill of sale. Also, I need to find out if there are any tax assessments on the parking spot. Any advice would be most appreciated. Thanks so much.

Mister Condo replies:

B.W., congrats on the kids heading off to college and congrats on the purchase of the two condo units. You would need to check with the local real estate records office to see what this unit owner actually owns before you negotiate a purchase price for the parking space. Generally speaking, if there are no improvements on the space (garage, carport) the parking space may be owned by the association and sold to the unit owner. Have there been any sales of such spaces since the original unit owners purchased? You might want to check with the Board or Property Management company to make sure these “parking space purchases” are transferrable or that the Board doesn’t have the right of first refusal on the sale. There should also be a title, and, just like any piece of real estate, a local land record can tell you more and you can likely check the tax status once you have the land record. Bottom line is to be careful. Just because someone sold you a bridge doesn’t mean you own the bridge! Good luck!

Condo Owner Resident Surrounded by Renters

A.C. from Florida writes:

Dear Mister Condo,

I am in Florida and one of 2 owners in a 45-unit building. The other owner has turned the building into rental units what can we do to get out of our mortgage and make him pay?

Mister Condo replies:

A.C., thank you for writing and I am sorry you find yourself in a less than desirable situation. I am not 100% sure I understand your predicament. If there are only two owners in this building and an investor has purchased the remaining units, there isn’t too much you can do outside of reviewing the association’s governing documents to determine if any rules or by-laws have been broken by the owner who is renting out his units. It is possible that there is a limit or cap to how many units can be rented out at any one time but I doubt there are any restrictions on the owner that forbids him from renting units in general. As for your mortgage, that is between you and the bank who holds your mortgage. Mortgages are not the business of the association so you are on your own there. As for getting the multiple unit owner to pay, that sounds unlikely in my opinion. You may wish to speak to a community association attorney in your state for additional clarity but unless rules have been broken, you may just need to either put up with the renters (who still need to follow the rules of the community) or sell your unit to get out of your mortgage and out of the community. Good luck!

Developer Delivers New Condo Unit with Clogged Toilet Lines

F.M. from Hartford County writes:

Dear Mister Condo,

I bought my condo in a development which is still under construction. I closed on and occupied the unit in October 2015. I have had ongoing issues with the toilet in my unit (there are 2 bathrooms, the other toilet is in proper working order). The builder/seller has replaced the toilet, had a “camera guy” inspect (contractor of his choosing) and claims there are no visible issues. In the meantime, the toilet still clogs at least once a week and the flush is hardly ever smooth (lots of non-normal sounding water flow). My question is about what my options are other than continuing to work through the builder and the contractors of his choosing, if any, since the condo is still clearly under warranty. I do not want to pay for service/repair that is clearly some form of issue with the plumbing from the beginning. However, I also do not want to void any warranty. The builder is not wanting to take responsibility for this or other issues that have been raised since I moved in (paint and other accommodations). Because the development is still building new units, the condo association is still under his control. This is a new experience for me so I want to be sure I handle it properly.

Mister Condo replies:

F.M., the developer control period of a condominium is an exciting time as construction is ongoing and brand new units like yours appear and the association takes on new life, new common areas, and new amenities. The developer’s primary job is to get the units built and sold at a profit. That often means saving pennies wherever possible. In your case, that may be with the plumbing that is causing an ongoing toilet clogging issue. You are wise not to attempt any repair on your own because you would void any warranty between you and the builder. Unless you are willing to undergo the expense of hiring an attorney to possibly bring suit against the developer for a possible construction defect claim, there is little else you can do. There is no association to complain to and this would not typically fall under the association’s responsibility. You may be able to hire your own plumbing or building inspector to get a second opinion but, even if you do, you will likely need legal guidance to assist if a defect claim is warranted. Speaking with an attorney to determine your rights is my best advice. During that conversation, bring up any other construction defect issues you are experiencing. Good luck!

Forcing a Unit Owner to Sell to Make Association Fannie Mae Compliant

M.B. from Southern California writes:

Dear Mister Condo,

There are 51 units in my building in Southern California. I am aware of a Fannie Mae Guideline that states that no one owner can own more than 10% of the units. In my building, there is an owner who owns 13 units which is 25%+. Because of this, several sales (5 in the last 3 months) have fallen out because the buyers cannot get financing. Question is: is there a legal way for the HOA to sue that unit owner to get him to sell his units until he owns only 5 since he is preventing the sales of any units in the building which, in turn, is also preventing the prices of our units from going up (depressing the building)? Do the other unit owners have any recourse?

Mister Condo replies:

M.B., as you know, I am not an attorney nor am I an expert is California state law so please accept my advice as friendly and not legal. For a legal opinion, you need to consult with a local attorney who is verse in your state’s laws regarding HOA and condo association law. My first blush answer to you is that this owner has not done anything wrong. Unless your by-laws state that no one person may own more than 10% of the units, you likely don’t have a leg to stand on. The unit owner didn’t cause Fannie Mae to set its guidelines. In fact, Fannie Mae could change its rules tomorrow to 5% and then other owners would be effected. Unless you could prove that this unit owner was maliciously trying to prevent sales of other units within the HOA, I don’t think there is too much you can do. Non Fannie Mae mortgages do exist. They aren’t as easy to find and they don’t always have as favorable a rate but that really isn’t the concern of the unit owner who simply purchased units as he saw fit. I am sorry I don’t have more positive advice for you but I don’t think there is too much to be done here. Good luck!

Purchasing Neighboring Condo Unit in Foreclosure

L.J. from New Haven County writes:

Dear Mister Condo,

I live in a 3-unit Condo Association. One unit is in foreclosure. I own one. Can I purchase the other that is in foreclosure?

Mister Condo replies:

L.J., unless the condo’s governing documents prohibit the purchase of more than one unit, I don’t see why not. However, I would have to ask you why you would want to? If your plan is to knock down a wall and make one large unit out of the two, that is very likely not allowed. If you are going to be a landlord and rent out one of the units, I see no problem. Or perhaps you are thinking of purchasing the distressed unit to turn around and sell it? Again, I see no problem. Just understand that you will be fully liable for the common fees and any other assessments that the association gets hit with and that you will have not one, but two, obligations to pay. As long as you go in with your eyes wide open, I see no issue. Good luck!

Condo Owner in Arrears Seeks to Purchase Second Unit

R.D. from outside of Connecticut writes:

Dear Mister Condo,

We have a small commercial condo complex. A current unit owner is in arrears for over $4000. He is trying to purchase a unit that is for sale. Can we block him from making the purchase until his other unit fees are paid in full?

Mister Condo replies:

R.D., I am not aware of any law that would prohibit this unit owner from purchasing a second unit in your association just because he or she has fallen behind in common fees or assessments due to the association. Unless your by-laws have such wording (doubtful), my guess is that the association has little to say about who can purchase into the association. The larger question is how has this person gotten so far into arrears and what is the association doing to collect its monies? Certainly, by this point, all efforts should be made to collect the association’s dues, up to and including the use of a professional collection service and/or attorney to bring suit against the unit owner. I find it unlikely that a unit owner that far in arrears would have the credit to secure a mortgage for a new purchase but, again, that really isn’t the concern of the association. Collecting the fees due that are in arrears should be the priority. I can only imagine the burden it puts on a small association like yours. Good luck!

Private Entry Requirement for Condo

R.S. from outside of Connecticut writes:

Dear Mister Condo,

I thought that all condos had their own private entrance, directly from outside. We rented with option to buy what was described as a condo, but in effect, there are 3 flights of stairs that take you to the front door, which is on an open floor with many different doors opening from it to several condos. Any thoughts on this?

Mister Condo replies:

R.S., from what you are describing, there is a common area leading to the individual units. The units are described in the deed as what is included specific to that condo. There is no requirement that a condo have a private entrance directly from the outside and, in fact, that would be impossible in many circumstances. Think of a multi-floored condominium building. Folks on the fifth floor would need to enter on the first floor and then use shared areas to get to their floor, a shared hallway to get to their unit, and so on. This is quite common. All of these common elements are owned and maintained by the condo association. Your monthly common fee contribution goes, in part, for the upkeep and maintenance of these common elements. Additionally, because these areas are under the direct control of the association, the Board is charged with governing their use. That is why you will have rules about what can and can’t be done in the common areas. A good example is storage. Condos typically prohibit storage of any owner items in common areas. This is to stop folks from having to navigate past bikes, toys, furniture, and any other items folks might try to store in the common areas. The open area you have described is a great example of an association-owned common area. I hope that quick explanation helps. All the best!

Condo Board Dictates Which Vehicle Can Be Parked in Owner’s Space!

J.Z. from outside of Connecticut writes:

Dear Mister Condo,

Can my condo association stop me from rotating which car I park in my space? Can they stop my wife and me from rotating our cars in our space? They want to assign only one car to my space. We can’t swap when it is not being used. Is that right?

Mister Condo replies:

J.Z., that sounds like micromanagement at its finest to me but regardless of why they want to do it, you should look at your condo’s governance documents about parking to get your answer. My guess is that there is nothing in the documents that gives the Board the power to dictate which car you park in your parking space. That being said, I have to ask why they would care. If one of your cars is an oversized vehicle or a commercial vehicle, there may be some rules about that. Also, if you have some type of a permit/sticker program and they need to assign a marker to the vehicle in the space, I can see where they might want to control which vehicle you park there but the question you have is “can they”? Since I am not an attorney and offer no legal advice here I have to suggest to you that my gut is to tell you they don’t have the power to control which vehicle you park in your space. However, before you go defying your Board and racking up fines and parking violations, why not speak with an attorney from your area who can give you a legal opinion. Once you armed with that, you should feel free to follow the advice of the attorney and enjoy your parking space as you see fit. All the best!