Should I buy into an inactive HOA who doesn't want to provide resell certificate?

Started by DreamH • 3 replies • 1529 views

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DreamH (Washington)
Posts: 2

Posted:

This is 5-units condo. Two units have been sold. Two units are still owned by the developer and are held in a LLC name. The developer who is also the declarant of the HOA personally owned the 5th unit. Now he defaulted on this unit and was foreclosed by the bank. He let the HOA became inactive by not submitting the annual report and not paying the renewal fee to the State. When I try to buy this 5th unit from the bank, he didn't want to provide any financial statement and resell certificate. The Master insurance policy is still current and he is still paying all the utilities bills for the common area at the moment. My questions are:

1. What is he trying to hide by not responding to our request of resell certificate? What can he gain by doing so while the other two units owned by his LLC are still on the market?

2. Should I still go ahead to buy this condo? What should I watch out for?

Thank you so much for any advices.

RobW (California)
Posts: 279

Posted:

It sounds to me that you would be better off looking for a unit where everything is disclosed, and the HOA is alive and well. If the developer defaulted on his own unit, what is going to happen 2 years from now when construction defects begin to show up? Will that developer come and fix those things?

You know the old saying: You get what you pay for. You might luck out, but chances are that this "great deal" is a "deal" for a reason.

Rob

DreamH (Washington)
Posts: 2

Posted:

Thanks very much Rob for your comments.

This developer is just a general contractor. The condo was built by another construction company and was finished five years ago and I think the warranty from the builder is already expired. The condo is in good shape.

GlenL (Ohio)
Posts: 5,491

Posted:

Quote:

Posted By DreamH on 01/29/2011 10:20 AM
Thanks very much Rob for your comments.

This developer is just a general contractor. The condo was built by another construction company and was finished five years ago and I think the warranty from the builder is already expired. The condo is in good shape.

By good shape I assume you mean you have had it inspected by a licensed professional. Now you need to hire an attorney to explain all of the ramifications of buying this "deal". While your buy in may be a deal, you do realize that being one of five owners means that you will be responsible for one fifth of the maintenance costs possibly more if your neighbors default. You could conceivably be on the hook for half of the costs or more. My advice is to run and don't look back.

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