Is Your Condo or HOA Financially Sound
Last weekend I had several emails from readers with questions on disclosure or rather a seller’s failure to disclose defects or issues that materially affect the property they purchased. It’s really hard to specifically answer some of the questions because I really don’t have access to all of the information involved in their specific situation. Besides that, I’m obviously not a lawyer and when there’s a dispute in disclosure it’s a law issue, not a real estate issue.
What I can offer are a few tips on how to get the answers to questions you may have before you purchase Bonita Springs real estate.
A lot of questions were raised about homeowners not paying their assessments, country clubs closing and membership structures changing. Underwriting mortgages is different with single family homes and the guidelines aren’t as strict as with condominiums so there isn’t as much difficulty getting financing on single family homes with HOA growing pains.
That doesn’t mean that buying into a troubled association isn’t an issue, however. Where the line is drawn about when defaulting quarterly assessments is materially affecting the property is a gray area.
If you’re a buyer you have every right and a responsibility to thoroughly investigate the real estate you’re buying. Occasionally, that investigation has to go well beyond just a standard home inspection.
The biggest fear most buyers have when looking at real estate to purchase is getting stuck with someone else’s problems. The worry of buying a home with hidden issues is even more of a concern with the down turn in the economy and increase of homes that are sold with bank involvement or at auction.
There’s generally a flurry of addendums that accompany the sales contract. Depending upon the nature of the transaction there’s often a seller’s disclosure that is filled out by the current owner of the home and presented to the buyer. The disclosure is several pages of questions and answers regarding the condition of the home.
Sometimes there just aren’t disclosures available. When the seller has unexpectedly moved on to greener pastures buyers who are dealing with an estate have to make do. When the seller of the home is the bank, there isn’t usually a seller’s disclosure so the burden of discovery becomes the responsibility of the buyer.
There are a few ways to make sure you’re getting what you pay for and not buying someone else’s headache or buying into a homeowner association that is plagued with management or financial issues. Checking the “homework” of others is now sometimes necessary.
When buyers decide to purchase a home that is part of an estate, a bank owned foreclosure or a short sale the purchase agreement is written on an as-is sale contract. Buying real estate as-is isn’t as scary as most consumers imagine it to be. Buyers still have due diligence periods to have proper inspections performed even when buying as-is.
A few more bases can be covered by asking a few questions. Ask if the home has been listed before. If it has been listed prior to foreclosure or when the owner was alive there may be a chance to get a copy of any disclosures that were filled out sometime in the past. Though it wouldn’t be included as part of your transaction it will give you insight into the history of the home and any past issues the previous owner may have had. Sure, the agent that has the documents may not share them but it’s worth asking. Sometimes they’re even hosted on the MLS as attachments.
The neighbors are great resources for information about the home, the prior owners and the status of the neighborhood association. At the very least, the neighbors can point you in the direction of a resident that is an officer or on the board of the association.
You can also go to www.sunbiz.org and find the name of the association management company and the officers of the HOA. They’re sometimes posted at the community pool or clubhouse, too.
Besides reviewing the current association budget, buyers can request a couple of sets of the last association meeting minutes. Suggestions of assessments, excessive late and unpaid quarterly assessments or upcoming membership changes could be mentioned and tip you off to an issue that the seller doesn’t mention, but will be important to you as a new owner.
There are some community homeowner associations that have been hard hit by short sales and foreclosures. Some have experienced more than one special assessment to make up the shortfall from the owners that aren’t paying their share of dues. Some have had their association dues double and even triple to make up the difference of the shortfall.
You can get a sense for how many folks may be falling down on the dues by searching the association name on the Clerk of Courts website. The two local sites are www.CollierClerk.com and www.LeeClerk.org. There is usually a lien filed against the property owner by the association when they’ve fallen behind. You may also notice a lis pendens filed against the property which is commonly, but not always, bank action toward foreclosure in our current market.
There’s a great deal of information and data out there that is accessible public information or at least obtainable just by asking a few people the right questions. Most of the information is even free. You just have to put forth the effort to protect yourself and your investment. At the very least check up on the answers that you’re given to make sure they’re accurate.
Real Life in Bonita Springs is a project by Chris Griffith dedicated to writing useful blog posts for consumers about the Bonita Springs, Florida area. Find out what it is really like to live in Bonita Springs, Florida by reading about our fair city. You’ll get the latest in local real estate information, Bonita Springs real estate market reports and a little bit of humor. If you have topic ideas, feel free to request a story about the idea, after all, this site is just for you.
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