If you’re a prospective Home Buyer and considering the purchase of a Condominium … or a home located in and governed by a Homeowner’s Association (HOA), there is important information you need to know regarding prior to signing a contract.
* (For further info, read 2 of my previous posts on Condo/HOA buying: “To Condo or Not to Condo”. That Should Be the Question …” and … “How to Determine if You’re Viewing a Condominium or Townhome”.)
Some of the details a new Home Buyer should know regarding Homeowner’s Associations are:
- Rules governing the Homeowner’s Association (HOA)
- Restrictions attached to the ownership and use of the property
- Assessments, Fees, Dues *
* Are any of these Assessments past due? And if so, what percentage?
- Budget of the HOA
- “Health” of the HOA
- Status of Reserve Funds
- Percentage of Owners versus Renters
If you’re on the flip side of the transaction and the SELLER of a property impacted by a Homeowner’s Association, what information and documentation should you disclose and make available to prospective Buyers?
As most Buyers will also be utilizing a Mortgage to purchase the property, the following info and documentation will most likely be required from a Seller, the HOA, or the Signee (property holder) involved in the transaction.
Note: Be aware that the Mortgage Lender representing the Home Buyer will need or request some of the following info/documentation also.
- A copy of the Covenants, Conditions, and Restrictions (CC&Rs)
- A copy of the HOA Budget/Accounting
- Declaration and By-Laws
- HOA Questionnaire and/or Survey
In Illinois and the Chicagoland area, a HOA Questionnaire/Survey will be requested by the Mortgage Lender or Buyer’s Attorney. There is typically a charge for the Homeowner’s Association to fill-out and prepare this document. The person responsible for this payment is often designated as part of the Real Estate Contract.
Sellers that make these documents and information available to potential Home Buyers (and their representatives) and take measures to act proactively provide a great service. They help facilitate their sale, the transaction, and the Buyer’s mortgage application more quickly and smoothly.
Should you be thinking of selling a home or condominium located within a Homeowner’s Association, start gathering this information and documentation sooner than later in the sale process. That way there will be opportunity for fewer delays caused by a Buyer’s questions or requests.
As an added piece of information:
Please be aware that in the cases where the Seller is a Bank, or an Entity such as Fannie Mae, Freddie Mac, FHA, or VA, often times there will be little or NO information made available to the Buyers from the Sellers. In other words, the Buyer MUST track these down themselves through whatever means.
Bottom line, there may be some “inherent” risks and extra “work” involved when buying a property that has been Foreclosed upon. The “price” may be discounted, but so may the “offerings from the Seller”. This can be especially true when the property is a condominium. That’s why working with a Mortgage Lender, Realtor, and Attorney experienced in these types of transactions is so very important.
If hoping to buy a Chicagoland Condo, or home located within a Homeowner’s Association … contact me today. I’ll put my 37 years of Mortgage experience and knowledge hard to work on your behalf.
I can be easily found at any of the following: