Buying a Condo | Something to Look Out For
When Buying a Condo Always Look Out For Law Suits
Buying a condo can be thought of as buying into a small business. There is a board of directors, a management company, subcontractors to deal with, bills to pay. Just about everything that goes on in a typical business. Lots of it goes on quietly in the background, handled by volunteer unit owners and a management company. This makes condo living attractive. Most of the outside issues are done by someone else.
Just because it is being done by someone else does not mean all is going smoothly. All condo associations mail out information about board of director meetings. The Management Company mails notices about issues they handle. Like any business things can go wrong and disputes arise. Read the mailings to keep up with what is happening with your association. If you are an investor have one set of notices sent to your unit set to where you live.
I just went through the process of buying a condo with a client. One week before settlement it was discovered that a lawsuit had been brought by the board of directors against the condo builder. The owner was an investor and did not know this had happened. It was a fairly new legal action and motions had to be filed and consultants hired to determine the amount of damages. And the attorneys did not want the condo board president and the management companie letting the other side know what they are doing.
Since no one in charge would write a letter of explanation to the lender in sufficient detail all buying, selling and refinancing from standard sources came to a stop. It remains to be seen if any alternative loans can be found. They will have to five year adjustable loans instead of 30 year fixed rate loans The lady buying a condo here is not happy.
This could have been prevented had the unit owner read his condo mail and made the law suit known through regular disclosure documents. At best, my buyer will have to pay for 2 appraisals and 2 home inspections. At worst, she will pay those fees and not be able to get any type of loan.
All because a unit owner did not pay attention to the condo “business” that he bought into.