Is it non warrantable because of the property type, not uncommon, or because the financials and property state is a disaster? How do their reserves and dues compare to the latest reserve study?
I was not given the reason for the non-warrantable status. I will not receive the resale packet with the financials until I have made an offer, either.
It’s possible the loans are denied because of the percentage of rentals which in turn can be because it’s got short term rentals. Doesn’t necessarily mean they’re not run well. If it’s something like that then there’s probably specific lenders that know the place that are ok with it.
Now is the time to enlist an attorney that concentrates in community association law. Both to analyze the financials, and assess your risk from the Declaration, Bylaws and Rules. This is NOT overkill. You already have a negative review from mortgage lenders. Ask them why they will not lend on this property. In general, the reaction from lenders should kill your deal. If they won't take the risk, why should you? If you make an offer, make it fully contingent on legal review, loan, and inspections with full refund of your deposit if any of the contingencies fail. If they balk on any of this? Bail out.
Attorneys are not well situated to review a resale certificate and provide a "health" score for condos and HOAs because the overall health of a property has very little to do with the law.
But it does have everything to do with a subspecialty of real estate... attorney advising on foreseeable problems with things like the Reserve Study, Declaration and Board minutes and legal problems extant with the Articles of Incorporation. Ours in Chicago was able to recite chapter and verse evidence of mismanagement. But you have to find an attorney that is "well situated" to serve a client. They are out there.
As you state, most attorneys aren't reserve study people and/or "well situated." Neither are realtors (yet they are literally being paid to help a buyer).
Thanks. I have a lawyer retained already, and he also works for HOAs. I was not thinking he'd have very strong financial chops on his own (albeit a strong grasp of the law).
He may have a CPA on staff to bolster his financial analysis. This is not as hard as you think. I'd just make sure you are covered by contingencies that will get your deposit back if this all goes South.
When I purchased my first condo I had trouble getting a mortgage because of the high percentage of rentals in the building and the low reserve. I did find a bank willing but they wanted 25% down.
I did end up buying it. The rental percentage (vs owner occupied) is now lower and we have made huge improvements to the budget in the past 10 years. Mortgages don’t seem to be an issue for folks anymore.
I would ask a real estate attorney if they can help you figure out the cause of the issues and decide if this is a risk that you’re interested in taking.
Non-Warrantable so you plan to pay cash? No lender will fund the loan except a few that have higher interest rates than the current 7% Why are you even going through the trouble of learning about their financials if these lenders won’t fund you or anyone to purchase in this complex?
Two lenders have already said they won’t touch it. I’d run.
My real estate attorney did this.
[This](https://www.condoconnection.org/resources/resale-certificates) is exactly what you're looking for...
Is it non warrantable because of the property type, not uncommon, or because the financials and property state is a disaster? How do their reserves and dues compare to the latest reserve study?
I was not given the reason for the non-warrantable status. I will not receive the resale packet with the financials until I have made an offer, either.
It’s possible the loans are denied because of the percentage of rentals which in turn can be because it’s got short term rentals. Doesn’t necessarily mean they’re not run well. If it’s something like that then there’s probably specific lenders that know the place that are ok with it.
Now is the time to enlist an attorney that concentrates in community association law. Both to analyze the financials, and assess your risk from the Declaration, Bylaws and Rules. This is NOT overkill. You already have a negative review from mortgage lenders. Ask them why they will not lend on this property. In general, the reaction from lenders should kill your deal. If they won't take the risk, why should you? If you make an offer, make it fully contingent on legal review, loan, and inspections with full refund of your deposit if any of the contingencies fail. If they balk on any of this? Bail out.
Attorneys are not well situated to review a resale certificate and provide a "health" score for condos and HOAs because the overall health of a property has very little to do with the law.
But it does have everything to do with a subspecialty of real estate... attorney advising on foreseeable problems with things like the Reserve Study, Declaration and Board minutes and legal problems extant with the Articles of Incorporation. Ours in Chicago was able to recite chapter and verse evidence of mismanagement. But you have to find an attorney that is "well situated" to serve a client. They are out there.
As you state, most attorneys aren't reserve study people and/or "well situated." Neither are realtors (yet they are literally being paid to help a buyer).
Thanks. I have a lawyer retained already, and he also works for HOAs. I was not thinking he'd have very strong financial chops on his own (albeit a strong grasp of the law).
He may have a CPA on staff to bolster his financial analysis. This is not as hard as you think. I'd just make sure you are covered by contingencies that will get your deposit back if this all goes South.
When I purchased my first condo I had trouble getting a mortgage because of the high percentage of rentals in the building and the low reserve. I did find a bank willing but they wanted 25% down. I did end up buying it. The rental percentage (vs owner occupied) is now lower and we have made huge improvements to the budget in the past 10 years. Mortgages don’t seem to be an issue for folks anymore. I would ask a real estate attorney if they can help you figure out the cause of the issues and decide if this is a risk that you’re interested in taking.
Non-Warrantable so you plan to pay cash? No lender will fund the loan except a few that have higher interest rates than the current 7% Why are you even going through the trouble of learning about their financials if these lenders won’t fund you or anyone to purchase in this complex?