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We were about to close on a apartment, short sale unit, today we heard that we need to pay for the HOA debt that previous owner owned, almost $3000 US, but we don’t own the place yet and we were never aware of such deb, but need to pay off this debt for the previous owner, or else we can’t close and if we withdraw, we could be sued for withdrawing due to the below statements my realtor underlined on the contract. Does this sound right to you? To me, nothing below shows that we are obligated to pay for this HOA nor should we be sued for withdrawing due to this HOA debt issue..FYI..both the bank and the previous owner does not want to pay for this HOA deb.
Quoted….
The owner can’t sell the property unless the creditors (“Third Parties”) agree to accept a payment that is less (or “short”) of the amounts actually owed to those Third Parties.
2. NO BINDING CONTRACT WITHOUT THIRD PARTY APPROVAL. A Short Sale requires the written approval of the Third Parties. Consequently, the owner of the property, and any interested buyer, are adviced that even if they reach an agreement between themselves for the purchase and sale of the property, that agreement will not be binding until the Third Parties approve the terms of the Short Sale.
Yes, it sounds right, but not knowing what state you are in, I am not sure.
It is my understanding that in FL, the buyer of a property within an HOA assumes all debt for unpaid assessments. (Unless it is a bank foreclosure, in which case, the bank has a cap on how much it must pay- go figure!) But if you are purchasing the property from the individual owner, the amount owed for unpaid assessments would become your responsibility.
It would be a good idea to meet with a qualified real estate attorney to see what your options are. The couple hundred dollars spent could save you a great deal more in money and frustration.
Another thing that you should check is the financial stability of the HOA itself. With so many foreclosures and assessments going unpaid, many owners of property within an HOA are finding themselves with special assessments. And, depending on the amenities within the HOA, it is important to know the condition of their reserve account. If they have a pool and clubhouse, for example, there should be money put aside to replace items such as the roof, pool motors and coping, etc. If the reserves are not funded to make these repairs, owners could be faced with a special assessment or closing the pool or clubhouse.
Every state is different. This is why a good RE attorney is so important. While you should have done your homework ahead of time, there are no textbooks for this course that I know of. These are crazy times. Don't be discouraged, just get to a good RE attorney and get the answers. You still could have an awsome deal.
This is a reason that short sales are not always the good deal that they seem. However, I have seen cases where the lender will agree to pay a portion of the past due amount.
This debt could be a lien on your property and if it is, how can you get clear title when you purchase it? It seems to me that someone needs to get this taken care of before closing. Clear title should be passed but it can't be if there is a lien on the property. Your Realtor should have done his / her homework and you as well to make sure there wasn't any hidden fees with the HOA. I have been through this with a foreclosure and it can get messy.
I believe that the Seller and the Bank cannot unilaterally deny the HOA their due.
In North Carolina, it is standard operation procedure for a Buyer or Agent and the closing attorney to check that the HOA dues are paid up to date.
And the Standard Contract indicates that the Buyer will receive clear title at closing.
HOA dues in arrears are paid from Seller proceeds to provide that clear title.
Since it appears that there will be no Seller proceeds, the questions are:
What does your contract say?
What does your agent and/or attorney say?
What does your contract say?
What does your agent and/or attorney say?
per my agent, she said I need to pay for this and she said it's on the contract, but the contract gives very vague coverage that just simply says the bank has the power to have me pay these items, because the seller is broke.
per my agent, she said I need to pay for this and she said it's on the contract, but the contract gives very vague coverage that just simply says the bank has the power to have me pay these items, because the seller is broke.
If you don't trust your agent, you need to consult an attorney for guidance on the contract.
Here is my question, did you receive an HOA pack? In Virginia, if the property is in an HOA/POA, the buyer has 72 hours to review the docs and to back out of the contract WITH NO PENALTY if they do not agree with the docs. Included in that would be a summary from the HOA stating if the home has any violations and/or past due amounts.
If that is the case in your state and you have not received the docs, that may work for you. But again as stated by other posters, you may need to check with an attorney.
Here is my question, did you receive an HOA pack? In Virginia, if the property is in an HOA/POA, the buyer has 72 hours to review the docs and to back out of the contract WITH NO PENALTY if they do not agree with the docs. Included in that would be a summary from the HOA stating if the home has any violations and/or past due amounts.
If that is the case in your state and you have not received the docs, that may work for you. But again as stated by other posters, you may need to check with an attorney.
Interesting, Alabama does not do this. It is up to the Realtor and buyer to check on it.
When I bought into one in CA... the title company wouldn't close until I had signed stating I received the CC&R's.
I seller was past President of the HOA and furnished me with a complete binder... it wasn't good enough for the Title Company.
The Title Company insisted that it had to order a set from the HOA and told me not to worry about it since it was for my protection and the Seller is REQUIRED to pay for it.
The HOA management company charged the Seller through Escrow $250
Well actually, I had to pay up front through the Title Company and the Title company reimbursed me from the Seller's funds at closing.
The Title Company said it was to protect me.... and them
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