Financing in 90004>Question Details

Konil Lee, Home Buyer in

Does the seller have to disclose weather a single entity own more than 10% of the total condo units?

Asked by Konil Lee, "M" Streets, Dallas, TX Mon Jun 17, 2013

Hi everyone, I recently purchased a condo (They have 14 units) with cash payment (No mortgage was obtained). I was recently in need to get a cash out loan from the property and during the process found out that there was an investment company that owned 5 of the units (35%) in our complex. The lender I was talking to advised me that I don't qualify for the loan because Fannie Mae has a rule where no single entity can own more than 10% of the total condo units.

My question is, does this kind of information supposed to be disclosed by the seller or someone? I’m in real trouble here because this will adversely affect me when I decide to sell this condo (buyers will most likely have to pay cash, or mortgage via Credit union).
Anyways, many thanks in advance.

Best,

0 votes Share Flag Financing in 90004

Help the community by answering this question:

Answers

6
In most states, that gets disclosed on the resale certificate. However, anybody can search the FHA Condo Approval site https://entp.hud.gov/idapp/html/condlook.cfm to see if the condo is, in fact, FHA approved.

There are other reasons why a condo may not be FHA approved, owner occupancy, percentage of commercial or live/work spaces, for example. But I have to tell you, Konil, it doesn't appear that this is a disclosure requirement in Texas.
1 vote Thank Flag Link Mon Jun 17, 2013
Unfortunately, most sellers would not have this type of detailed information, however, if you had an escrow... someone should have ordered a copy of the CC&R's and underlying docs... often when the buyer gets a loan, there is an HOA certification and it asks these questions specifically. If you had an agent, they should have made you aware of this however, if there was considerable interest or if this was a distressed sale, you might not have got this information. There is the saying, buyer beware... and this is precisely why there are contingency periods to perform buyer investigations and discover these kinds or pertinent information. If you decide to sell, you are right... you will most likely need another all cash buyer, or you may consider seller financing since you don't have a loan... good luck.
1 vote Thank Flag Link Mon Jun 17, 2013
The seller must disclose "all known material facts". It is possible the previous owner was not aware of the situation.
Many of the documents that are signed during purchase do advise the "buyer" to satisfy themselves as to many issues that might effect the property.
This type of information will be uncovered regardless, when it comes time to try to get a loan. As you found out, you cannot get a loan when a property has too many units owned by the same person.
Perhaps this could change in time? If not, when you sell you can indicate that it must be a cash sale due to the loan restrictions you have discovered.
0 votes Thank Flag Link Tue Jul 16, 2013
This should have been disclosed. Because you were paying cash it did not come up as a question from the Lender, however, the Seller should have told you. At this point however, your only option may be to consult an attorney.
0 votes Thank Flag Link Tue Jun 18, 2013
Konil,

I am a realtor and not an attorney. The seller may not have had that information. When a prospective buyer is purchasing and obtaining a loan yes lending institutes have restrictions on the total percent that an individual or investment company can own in a complex. During the loan process all parties would have been aware if one party owed more that the maximum percentage for lender to make the loan. You purchased all cash information could have be check but you probably did not consider this restriction when you purchased. I would check with Mortgage Brokers. If they cannot do the refinance ask for referring Mortgage Co. Do not give up there is a possibility that refinance can be done just not with Fannie Mae.

Gail Mercedes Cole
EXP Realty
310.853.9933
0 votes Thank Flag Link Mon Jun 17, 2013
When there are only 14 units in the building, it is very easy for an investor to own 10%. I have this type of situation for one of my listings and I am putting it in writing right on the MLS private remarks for agents. That's called disclosure. I agree with what has been said earlier by Mark and Richard.
You might be able to get private loans which have a higher interest rates, but that does not help you for future resale. Give me thumbs up if this is useful to you!

Muriel Levin, Broker - Realtor
HAFA certified,Certified Negotiator, Short Sale and Foreclosure Resources Specialist. Residence, income properties and commercial leases.
Votre agence immobilière de confiance sur Los Angeles et toute la région de la Californie du Sud
Agent Immobilier Francophone a Los Angeles, Hollywood,Santa Monica and Beverly Hills . Achat et Ventes immobilières a votre portée, de loin ou de près.

323 363-91-40
Muriel Levin @ gmail.com
0 votes Thank Flag Link Mon Jun 17, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer