Category Archives: Selling

Condo Resale Disclosure

P.E. from New Jersey writes:

Dear Mister Condo,

What are the disclosure laws in New Jersey for the resale of a condo?

Mister Condo replies:

P.E., I am not an attorney so I cannot give you a legal answer here. You should speak with a qualified attorney in your region to get a legal response to your question. However, I can offer some friendly advice. Michael Odenthal of the New Jersey Cooperator has an excellent piece I commend to your reading: https://njcooperator.com/article/rules-of-disclosure/For the most part, it is a “buyer beware” transaction. However, a buyer that withholds pertinent information is typically liable for withholding of that information. My friendly advice is that any buyer have an attorney represent their best interest and have a full home inspection performed BEFORE signing any purchase and sale agreement.

FHA Not Satisfied with Condo Reserve Fund

T.S. from outside of Connecticut writes:

Dear Mister Condo,

I am having trouble getting this Condo approved for mortgage financing. I was told that if the current budget does not have a line item for the Reserve Fund, that would make the HOA ineligible. Can you give an example of a budget that shows a Reserve Account? Why is a savings account on a balance sheet not sufficient? The HOA is saying this is the Reserve Account. Please help.

Mister Condo replies:

T.S., when reviewing the condo’s eligibility to qualify for mortgages that are backed by the FHA, the lenders look to see that there is a Reserve Fund and that the association is making at least the minimum amount of annual contribution (Currently 10% of the budget). Local mortgage lenders typically require this stipulation because they want their mortgages insured or underwritten by the FHA. Typically, condominiums maintain FHA approval status as it makes it easier for units to be bought and financed by owners seeking FHA-backed finance options. However, there is no legal requirement that forces the condominium to comply or even maintain FHA approval status, leaving mortgage seekers like you in the lurch. There are mortgage companies that specialize in dealing with FHA approvals and this association might be well served by working with one to achieve FHA approval, making it possible for mortgage seekers such as yourself with better access and option when it comes time to take a mortgage on one of the condo units within their association. It isn’t as simple as having the association claim an association-owned saving account is the Reserve Fund. Good luck!

Condo Square Footage Marketed Using Common Area Figures

C.C. from outside of Connecticut writes:

Dear Mister Condo,

Is common area factored into the total square footage of the sale price of a condo?

Mister Condo replies:

C.C., typically, common area would not be factored into the individual square footage of the condo. However, sales prices are simply marketing tools and have no meaningful value as to what is or isn’t part of the condo. Realtors and unit owners selling their condos want them to look as impressive as possible. The deed, on the other hand, details exactly what the square footage of the unit is. If the deed says 900 square feet and the real estate ad says something different like A large deck adds to the lovely interior giving the unit 1200 square feet of living area, the buyer needs to beware before making the purchase. This discrepancy would be uncovered during the closing process when an attorney would likely be reviewing the deed with the buyer. Thanks for the question!

Neighbor’s Smoke Forces Condo Owner to Sell!

J.S. from outside of Connecticut writes:

Dear Mister Condo,

I am a condominium owner who can no longer hack the smoke. I see from this forum that the raging conflict rarely goes well. I AM LOOKING TO SELL THE PLACE. I am not looking for legal advice nor interested in beating a dead horse with the association again. I did all of the polite and never uncivil neighborly discussions, bought all the expensive air cleaners, spent countless dollars and days fixing insulation and ventilation, and tried countless variations of adjusting fans and windows.

The sooner I sell, the sooner my freedom from this. While I am not a Zen Monk I wish to enjoy my life in the here and now, free from resentments and in harmony as much as I can. At the risk of going off on a tangent, it’s not in any control freak power-hungry thinking to want fresh air any more than wanting food. Point being that the cosmic “here and now” talk goes out the window when basic survival needs are in the forefront. You may see an animal with flies around its eyes not even twitch, but if somebody blew smoke at it, it would freak out.

NOW TO MY QUESTION. How can I show the place to potential buyers during hours conducive to do so (nonbusiness hours; evenings weekends). The problem smoking neighbors leave for work during normal business hours and I can get the place aired out. I don’t feel obligated to put anything about neighbors in a seller’s disclosure document because that document is not about neighbors any more than the neighbors’ religion on sexuality or race and I chances are the buyer won’t be as sensitive to smoke as myself. My problem is that all hell breaks loose here when they get home from work, the times most conducive to show the place to potential buyers. I look forward to my newfound freedom after selling a place I really liked everything else about, but now how do I keep the culprit smokers from blowing the deal?

Mister Condo replies:

J.S., as a fellow non-smoker I feel your pain. There isn’t anything you can do about showing your unit to unsuspecting buyers. However, since there are so many folks unlike you and me, who prefer to smoke, why not use it to your marketing advantage. Use words like “smoker-friendly” or “ideal for smokers” in your marketing. In this world of “smokers be damned” I wouldn’t be surprised to see several potential buyers who smoke entering your unit and thinking they found their own Zen Monk experience. Win/Win, my friend. More and more, there are smoke-free communities and states that are outlawing smoking in high-density housing like condos. My guess is that you will be thorough in your quest for your next home. I wish you clean air and healthy living. Good Luck!

Must I Reveal Possible Special Assessment to a Condo Buyer?

R.R. from Hartford County writes:

Dear Mister Condo,

I recently was advised that our Board has started to address and extremely large repair required by the state. It has been mentioned in the Condo Minutes but no formal acknowledgment or assessment has been determined. I would like to run for the hills without telling the buyer and sell my unit before the news if official. Can I do that?

Mister Condo replies:

R.R., special assessments are very official and legal levies placed against the unit owner of record once ratified by the Board and the association. Once levied, they are the responsibility of the unit owner of record at the lime the assessment was levied. As a unit owner, you would receive notice and a payment date or payment schedule depending on how the assessment was levied. A “mention” in the Condo Minutes about an upcoming assessment is not the same as a levy of assessment. You would need to reveal (and pay off) an assessment as a term of your sale. You are not bound to reveal the possibility of an assessment. However, if the assessment has been announced and ratified and is not revealed to a potential buyer, you would very likely be sued for the assessment by the new buyer. If you are using an attorney for the sale, you would do well to explain what is going on and make sure you don’t set yourself up for that to happen. Good luck

Pre-Sale Special Assessment Assigned to Current Condo Owner

K.K. from Florida writes:

Dear Mister Condo,

When I purchased my condo in 2014, I was told no upcoming assessments. Surprise! Last August, I was told assessments for work done will cost me $15k or $155/month for 10 years. Now, I am selling my condo, can the remaining monthly 155 be transferred to buyer?

Mister Condo replies:

K.K., I am sorry you got hit with a “surprise” Special Assessment. In my opinion, there are no “surprise” Special Assessments unless the community experienced an unexpected and/or uninsured loss or a lawsuit that requires an unforeseen infusion of cash. If the assessment were for something as common as a replacement of a roof or to repair old decks or sidewalks, it was no surprise. That being said, the assessment is made against the unit owner at the time of the assessment. That was you. The association has an interest in you making the payments, not the new owner. You will very likely have to pay off the assessment before you can sell the property. It seems unfair but that is how it works. I hope your new home has no surprises like this for you. Good luck!

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!

Lack of Certificate Prevents Condo From Closing

J.V. from Manhattan, NY writes:

Dear Mister Condo,

My condo is in contract small 4-unit Brownstone in Manhattan. We are all on the Board, one man is the president that we all elected solely based on gender. Had I known that he was a very difficult person I never would have agreed. My issue is our management company whom has since been terminated never renewed our temporary c/o (that’s another horror story). I cannot close without it. The “president ” is not allowing me to move forward with an architect or an expediter (I’ll even pay for that first payment) to get the process started. It has been over a month. He wants proposals and very worried about money. We do not have very this important certificate which is dangerous. But I particularly need it to close. He may cost me my sale which gives me much stress and sleepless nights.

I’ve tried everything, talking, meetings. Now he’s in Italy for 2 months. What can I do as a Board Member with a pending sale to move forward so I can close? I don’t know where to turn. He is a blocker. Does he have this power to make me potentially lose my buyers? Also, my buyers are giving us 120 days (now less) to get the Temporary CO. They want my unit and I want to move!!!!

Can you advise or direct me to someone who can help?

Mister Condo replies:

J.V.,

Hello! Please understand that I am not an attorney and offer no legal advice in this column. From what you have shared with me, you will likely need an attorney to help sort these matters out. I am sorry to learn that your previous management company did not file the proper paperwork with the city to keep the building’s Certificate of Occupancy (c/o) up to date. You may have legal action against the association for allowing that to expire. That being said, unless you are able to file the appropriate paperwork to get your Certificate back in good standing, you are very much at the mercy of the Board President, who appears to be a difficult person and indisposed for two months. Typically, unless your governing documents specifically call for the President to take action, a duty such as filing for the Certificate could fall on any officer. Since there are only four of you on the Board, you may be as qualified as any other Board Member to handle the transaction. You should check out this web page for some insight: https://www1.nyc.gov/site/buildings/homeowner/certificate-of-occupancy.page

While your President is following a Good Business Judgment rule by getting bids for the architect or expediter needed to satisfy the CO requirements, if you are financially harmed by the lack of the CO, you may also have a case to sue your association. Again, speak with a qualified attorney before taking any action.

I am afraid I don’t have better news for you. The failure to have an active CO on file for your association is a most unfortunate event, caused by a series of other unfortunate events. If you do end up suing your association, it should serve as a wake-up call for them to not let the CO slide again. As you have said, it is a very important certificate in NYC. It should be treated so nonchalantly by the Board. Good luck!

HOA Seeking Additional Assessment from Former Owner

P.J. from outside of Connecticut writes:

Dear Mister Condo,

Can an HOA increase assessment amount 8 months after I sold condo and deed changed hands? The management co. made an error in what they call the “estimate” of their closing figures which were baked into the sale amount (buyer paid the assessment and price was lowered accordingly). Now they say I (previous owner) have to pay more even though the sale cleared title and resale cert was all normal. The letter tells me I owe more than what they thought I owed when they gave the figures at closing time.

Mister Condo replies:

P.J., this is clearly a legal question for a qualified attorney in your state. Different states handle these transactions differently so I cannot give you a definitive answer for your scenario. I will offer this advice. Once the sale is made and the closing is over and the title has changed hands, the seller is typically relieved of any further claims against the unit. In other words, if the HOA makes a Special Assessment after your name is off the title, that assessment is on the new unit owner. There are exceptions though and you really need to speak with an attorney from your state who can give you a proper legal answer for your situation. The way you have described it sounds fishy to me but I am not an attorney and cannot offer you any legal opinion here. I know I would be reviewing the details with a qualified attorney to make sure I was being dealt with fairly and within the scopes of local law. All the best!

Condo Price Rebound After Settled Lawsuit

J.B. from outside of Connecticut writes:

Dear Mister Condo,

Our condo dropped significantly in value just like every other condo community around us when the economy collapsed in 2008. In the meantime, our HOA began a litigation against the builder. This meant that when prices of other communities began to rebound a few years ago, ours remained low because mortgages were generally unavailable to purchasers and it has been all cash sales. All other condo communities surrounding us have now rebounded to pre-recession value, but our community has remained low in price due to the litigation. We just received notice that all parties have settled and the court ruling will be within the next couple weeks. We would like to sell our condo and are wondering how long it will take to see our condo value rebound now that the litigation has ended. Can we start using other similar communities as real estate “comps”? Thank you!

Mister Condo replies:

J.B., I am sorry your condo association was forced into litigation against a developer. Lawsuits can have long-lasting repercussions against associations including the financial burden of funding the suit when monies could be used elsewhere or put in Reserve, creating a strong financial position for the condo, which is desirable to an educated purchaser. That being said, if your condos look as nice as others in your market, there is no reason to think the units shouldn’t rebound now that mortgages are available. Price is driven by market demand. An encumbrance like a lawsuit can hinder demand but with the suit out of the way, I can’t think of any reason the prices shouldn’t rebound quickly. Make sure the unit is in good shape and that the association is doing all it can to keep the curb appeal in good order. The right realtor will market the unit properly and the market will dictate the price. Good luck!