Florida Condo: Buyer min Down Payment?

Hi JosephC17 - My gut says this rule is illegal. If this were at my condo, I would strongly oppose. Because most buyers use agency-backed mortgages with down payments below 20%. Your rules eliminates all those buyers, shrinking the pool of possible buyers, and making it take longer to sell, and reducing sales prices.

Giving you a citation will be hard. I think there is not one law that explicitly says "condo boards may not regulate the down payment amount for sale of a unit."

Rather I think it stems from a process of elimination: by default, unit owners have property rights: including the right to sell their property to whoever they want, and for whatever price and terms they want.

And unit owners retain those rights forever, unless they have been given up through some "valid" process. Examples of "valid" processes would be: if the state legislature passed a new law, or if the restriction was already in the deed before you purchased. (neither of these seem to apply in your case).

As a practical matter, the mortgage banks are a group who are negatively effected by this change.

So, check your docs for any provisions along the lines of "all banks holding mortgages on units in this condo must consent to any change in the bylaws..."

Interesting point of view. In my SFM HOA 90% of the purchases are cash and maybe only 2% are less than 20% down.

Even before your first post to this thread, I too wondered if an association requiring a specified minimum percentage for a buyer's down payment violated the federal fair housing act. I believe the legal argument for such a claim would rest on "disparate impact."

Googling showed me to be wrong. It appears that what the OP describes is not uncommon. Most HOA sites that speak to this do emphasize that the governing documents need to have some wording about the HOA being able to approve buyers.

One counter argument to any claim of "disparate impact discrimination" is that banks and other regulated lenders have always been allowed to set certain standards for qualifying for a loan. Of course these standards are going to disproportionately affect the poor. Of course the poor continue to be top heavy with certain demographics. But these financial standards as a whole are still allowed. A bank should not be forced to loan to folks that by all indications, and strictly by the (financial) numbers, do not have the financial means.

From memory, I believe banks and other regulated lenders have faced FHA-based (or civil rights based) discrimination suits and had to settle or lost the suit. But IIRC this is more because some lenders took a standard and applied it differently for different demographics. IOW the selective enforcement was the (big) problem, not the standard itself.

Because time and again the courts have ruled that any rule the board makes has to (1) be within the four corners of the bylaws, declaration and articles of incorporation; and (2) pass a "reasonableness" test.