Selling condo and HOA is being sued

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OpattyD
Posts: 8
Joined: Mon Jan 22, 2018 8:12 pm

Selling condo and HOA is being sued

Post by OpattyD » Tue May 15, 2018 7:09 pm

Recently put my condo up for sale and had multiple offers. I chose the best one and we went under contract.

While the underwriters were doing research, they found out that the HOA is currently being sued by a resident for a very petty issue they are having with their condo.
-First, the underwriters wanted proof that this condo was not connected to mine (provided immediately and it's in a completely different complex)
-Next, they asked for a copy of the most recent inspection of the residents condo to verify it wasn't connected to mine (document does not exist)
-Now, they want verification that the HOA has enough money in it's reserves to pay the resident if they were to lose in court or required to fix the issue (HOA has plenty of money for this).
-The HOA just learned about the lawsuit because they management company failed to inform them of the lawsuit.


Wondering if anyone has any ideas on how to get through this. I just want the place sold so I don't have to be a landlord any more. Do I have any legal options against the HOA or property management company? Any help/thoughts appreciated.


Thanks, Patty D

junior
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Joined: Wed Sep 10, 2008 6:14 pm
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Re: Selling condo and HOA is being sued

Post by junior » Tue May 15, 2018 7:28 pm

Inspection to determine if a unit is connected to another unit??? That makes no sense. It should be something you can document without an inspection.

For evidence you aren't physically connected to the unit, there will be a condominium plan by the original architect that shows which unit is next to which that you can provide or obtain. It probably would be with the other legal documents for the project that the project has as part if its records.

For the money in reserves to pay for repairs, you probably have an annual financial statement/ balance sheet showing what the homeowners association has in assets, or the management company has one and can provide it. They could also provide bank statement showing how much money the HOA has or even write a signed letter stating how much money they have.

Some lenders might require a letter from the project's attorney or maybe the association or management company confirming that the litigation issue is not significant in terms of potential loss. But you would have to ask them what they want.

MikeDun
Posts: 13
Joined: Mon Dec 21, 2015 8:14 pm

Re: Selling condo and HOA is being sued

Post by MikeDun » Tue May 15, 2018 8:34 pm

I had the same issues selling condo, there was pending litigation for slip and fall due to raised concrete; it took little longer but buyer was able to get approval from lender.
If your unit is under same association that's being sued than your unit is also part of litigation regardless if it is in separate complex.
What lender wants to know is:
1. Litigation is not due to major health or safety issues with building
2. Condo Master policy insurance has sufficient liability coverage to cover amount of litigation, attorney will probably have to provide letter detailing litigation and amount(in majority of cases litigation is being handled through insurance company and they appoint their own attorneys)
3. Regarding condo reserves, this is more requirement for general condo/project approval by lender in order to meet Fannie or Freddie condo guidelines, basically association has to put aside 10% of total annual association dues collected toward reserves.

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