So yes, you need to speak to an attorney to know if the HOA is adhering to its State Law required duties to answer your question, BUT know that the laws in WA are lax compared to the laws of some other States.
Given people from other States read these Trulia Q & As, it is worth mentioning that there may be different answers depending on which State and that State's Laws regarding minimum required standards for HOA Boards.
Good point, but here the potential suit would be against the HOA, not the buyer. As to your point though, I've seen suits against one party turn into large judgments in favor of the other party.
As a general rule, if you end up in court you've already lost.
If you contact an attorney he is going to ask you to show how much you have lost, at this point you canâ€™t prove a loss, not until you sell it for less than what this buyer offered. But in a short sale you wouldn't get anything anyway.
As for suing the HOA, you are a member of the HOA, The second question your attorney may ask is why you allowed the reserve fund to be underfunded. Just my guess.
NMLS # 6395
Financing Kentucky One Home at a Time.
If your property still qualifies for FHA financing, meeting FHA guidelines for Reserves, then not likely. If your property was qualified under FHA guidelines at the time the buyer made the offer, but later and during escrow lost that status, could be another story.
If your agent noted in the mls that buyers could purchase FHA, and that turned out not to be the case, then the buyer might be able to sue you for monies he may have expended pursuing a purchase via an FHA loan based on erroneous information.
Funny thing about suing people...sometimes they counter sue as a result and you lose not only your case but the counter suit. If the buyer could not get financing due to the insufficient reserves or some other reason like a pending lawsuit, and that was not disclosed, he might want you to reimburse him for his home inspection, as example.
Very good points below, this is a legal question so always get that advice from an attorney. I especially like Chris's answer though; you may still be able to sell, just not necessarily to that buyer or for that price. Get back on the market advertise a pre-approved price and let the new buyer decide what they feel is "Underfunded.â€
You do raise those an important concern. Without sufficient reserves some sales may fall through. Higher reserves generally require higher dues, although other factors can lead to low reserves. I once saw a condo that didn't even have $1,000 of reserves. It was very poorly run because the only reason they didn't have reserves is they didn't budget to create them, apparently thinking their relatively new building would remain new forever.