Bulk Purchase of Foreclosed Unit

Started by NancyA4 • 5 replies • 1354 views

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NancyA4 (Florida)
Posts: 17

Posted:

Does anyone have any experience with a bulk purchaser coming in and buying units that have gone thru the foreclosure process and are now owned by FNMA? We're a condo and after 3 years in the foreclosure process, we have units that are now owned by FanieMae. They hire a realtor to sell the properties now that they own them (original bank is no longer in the picture anymore.) Now there in a FannieMae consolidator wanting to buy one of our units. He says they buy several properties in bulk from FannieMae, then turn around and resell them individually. We've reiterated our no-rent policy, and are leery of this type of activity in our small community. If anyone has dealt with them, can you share your thoughts/experiences/etc? Thank you.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Nancy,

If the no-rental policy is part of the recorded deed restrictions, this buyer will be prevented from renting the unit (although that does not seem to be his intent). If the no-rental policy is a rule adopted by the board and/or owners but not part of the deed restrictions, then you may have a problem enforcing it.

I would be more worried about the person who buys from the bulk buyer. My understanding is that the bulk buyers want to make a quick turnaround so their buyer just might be an investor who intends to rent the unit.

NancyA4 (Florida)
Posts: 17

Posted:

No rental clause is in our Declaration of Condo, and we have enforced it in the past - with lots of angst and legal expenses.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You may want to be careful with this process. If your in Florida, they have had issues with such situations. So much so they made a law. Some people have gone to prison for this. They make the new owners own the property for atleast a year before they can turn around and sell the property. It's no longer an "own and run" situation. This happened because of so many questionable flippers not doing the job right and then selling the condos to unsuspecting buyers. That is something you should check into.

As far as rental restrictions, you did find out they are hard to enforce and not really worth the legal struggle. You may band them, but what is the punishment?

Former HOA President

GlenL (Ohio)
Posts: 5,491

Posted:

OK Melissa, since it is the holidays I'm going to give you the benefit of the doubt before I call Bravo Sierra but cite your source where can we find this "LAW".

Nancy the biggest problem with bulk sellers is that they often find bulk buyers. Under new lending guidelines buyers will have problems obtaining financing if more than X % is owned by one party. Worse yet is if they own enough properties to effect the votes, they can install their own Board or even amend documents. To my knowledge there is nothing that can be done to prevent someone determined to take over, even if you could somehow pass an amendment limiting the number of homes one entity could own, which is doubtful. All the person has to do is buy the maximum number allowed with one corporation, start a second corporation and buy the maximum number and so on.

Studies show that 5 out of 4 people have problems with fractions

LarryB13 (Arizona)
Posts: 4,099

Posted:

Glen,

My understanding from the OP was that there were several units in her complex owned by FannieMae but only one of those was in the package that the bulk buyer was considering. If that's the case, the rest of the owners have little to fear. Unless, of course, the bulk buyer (or others like him) purchase all the available units and band together to really screw things up. But that is just idle speculation at this point.

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