Condo questionnaire came back with 50% delinquency and there is pending litigation (Chicago: sales, foreclosure)

[JuanTheman88]

I am in the process of attempting to buy a condo in Chicago. It has been a nightmare. There is no need to get into all of the details, but I am supposed to close and move in on Sept. 3rd. My mortgage lender FINALLY approved me today (he took forever, very frustrating) and now he tells me the condo questionnaire came back with 50% delinquency and there is a pending litigation. There are only 6 units in the building, so this means 3 of them are behind in some fashion. He says he will still approve, but how important is this? Should I walk away? LOTS of time and money already invested. Appreciate any insight.

[Vlajos]

Did you see the condo questionnaire? Sounds kinda bad.

[JuanTheman88]

I did not. It does sound pretty bad.

[chet everett]

I am incredulous that a lender would approve a loan under these circumstances -- as if the 50% of units being delinquent is not a big enough red flag the pending litigation could very well be the kind of thing that results in the whole building just being totally unsellable.

If you were to ask anyone that has faced this nightmare situation you would not give a second thought to WALKING, NO RUNNING AWAY from this deal.

Seriously.

You know what happens in situations like this? Some investor with enough cash to buy all the units at some steep discount is pretty much the only way out. Not uncommon for such discounts to be at greater than 50% of what non-distressed sales would have been...

[Vlajos]

Originally Posted by JuanTheman88

I did not. It does sound pretty bad.

I have no idea how much money you have into this, but it does doesn't sound good. What neighborhood if you don't mind me asking?

[JuanTheman88]

It is by Chicago and Ashland.. Unbelievably sickening.

[Vlajos]

I think you may have to take a pass. At least read the questionnaire. Sorry.

[snoylekim]

I hope you were using an attorney for this purchase . There is the matter of the 22.1 Disclosure that you or they should have seen that should have mentioned pending litigation . If this wasn't disclosed, you might be able to recover the earnest money . Consult with your lawyer ASAP. Concur with above and RUN . 50% delinquency is bad, and horrible in a development with 6 units; the association might be so starved from such a delinquency that they cannot afford the legal costs to recover the money, and recovery can be extremely difficult in units that aren't financed ( units with mortgages can often get delinquent assessments via the lender ) . You don't want to buy a bunch of future trouble that will come with this unit .

[Lookout Kid]

If you have any contingency left, you will want to exercise it. Did your approved loan conform to the terms spelled out in the contract in terms of interest rate? For instance, if the contract said you had to get a loan under 4%, but you were approved at 4.5%, you can still get out of the deal. At this point, you may want to give up your earnest money and default. But that all depends on how much earnest money you have in this... It just seems like a better option.

To give you a comparison to what's normal, I was in a 23 unit building with just ONE delinquent unit going in to foreclosure, and even in that situation we all had to make up for the missing assessments to get the bills paid. This was a healthy building. 50% delinquency is a hell hole nightmare, and you need to get out of this ASAP! If your earnest money is only a few thousand bucks, get out. It will be cheaper in the long run.

[guitarguy1685]

I don't want to hijack this thread but could someone explain what is going on here? I'm asking because I'm looking to buy a condo and I haven't heard of this situation.

So half of the units are behind in mortgage payments or HOA fees? or both? How does that affect you? I guess that means the HOA can't provide services if people are not paying up?

So what happens to the other half who are not delinquent and already own the condo?