C.W. from Florida writes:
Dear Mister Condo,
Can a condo association demand 25% down payment on purchase? I have tenants who are living in the condo and want to buy it but they were told 25% down to buy it. I think this is crazy since they’ve been living there for years.
Mister Condo replies:
C.W., while it is unusual for a condominium to have a minimum down payment requirement, it is not impossible. I am not sure “who” told them they needed 25% down to buy it. Typically, the purchase and sale of a unit is a transaction between buyer and seller. If a mortgage is required, the bank may have a minimum down payment requirement but that is also outside the typical scope of the condominium association. Check the governing documents and see what it says about purchasing and selling. The association also has to be FHA compliant and the 25% down payment may be challenged as an FHA issue. You might also want to check to see if the condominium association has the right of first refusal (they usually do). This is to allow the Board to step in and purchase a unit that is being offered too far below market value. A sale like that could create a downward trend in the value of all units. All the best!