Home Buying in 60707>Question Details

Orangeone, Home Buyer in 60707

If I buy 1 condo in a 3 unit condo building with the other 2 units foreclosed who pays the building insurance until the other units are bought?

Asked by Orangeone, 60707 Sun Sep 5, 2010

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Dianna Voss’ answer
BEST ANSWER
There are a few things you need to have clarified. Is there a H.O.A., are there any reserves, who is managing these reserves, has the bank taken full ownership of the other units and does your unit have a separate Pin number?. If the bank(s) have taken full ownership of the other units, the banks will be responsible. If none of the above issues can be verified, you and you alone will be responsible tfor the insurance and possibly other debts associated with this building. Make sure you get full disclousure of the responsibilities of buying 1 unit and the others are in foreclosure.
1 vote Thank Flag Link Mon Sep 6, 2010
I agree with the two previous answers and I just want to caution you on this. You need to fully understand the risks involved in buying this property. There is no real way to know if and when the other units will be purchased and if they are not you could end up having to maintain an entire building while only owning 1/3 of it. I recommend the assistance of a qualified and experienced real estate broker who will make sure you do understand the risks before having you sign an offer. Best of luck and feel free to conact me for more questions.
1 vote Thank Flag Link Sun Sep 5, 2010
Not much to say except take Matt's advice and look elsewhere.
0 votes Thank Flag Link Tue Sep 7, 2010
Very very simply speaking, YOU will be the condo association if you purchase and are the only active owner in the building. If you are purchasing with a mortage, your lender may not agree to lend on a property in a building where the HOA is not solvent and active. You should discuss that with your lender and your buyer representative. You should discuss the obstacles with your lender and buyer rep and you should also definitely review the whole situation with your attorney. Be sure to get the most up to date copy of the bylaws and financials from the association too!
Web Reference: http://www.dreamtown.com
0 votes Thank Flag Link Tue Sep 7, 2010
Well there will be no h.o.a. so getting a loan will be tough. If something goes wrong with the building, like a roof problem or something like that, it could ultimately fall on you. Pretty much, I would stay away and recommend all my clients to stay away, unless you were an experienced investor.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
mlaricy@americorpre.com
708-250-2696
0 votes Thank Flag Link Sun Sep 5, 2010
Yeah.

Let's put it this way - if you have a mortgage on your condo, you're ultimately responsible for maintaining the insurance. That doesn't mean that the entities that hold title to the other two units do not have obligations, just consider that if they don't pony up, the only recourse the HOA has is "simply" to foreclose, which doesn't help you very much.

If you let the insurance lapse, your lender can slap a minimum-coverage policy (which comes at maximum expense, btw) on the property at your cost.

Buying this condo doesn't have to be the dumbest thing in the world, but you should be getting a deal that makes the risk worth your while.

All the best,
0 votes Thank Flag Link Sun Sep 5, 2010
If they have already been foreclosed on, then the banks who own the units would have to be paying monthly fees towards the upkeep, maintenance, insurance etc of the condo association. You will have to assess if it is self managed or if they had hired a management company, you would have to have an attorney or someone review teh condo docs to make sure if no one is managing it, to vote a president and manage the association paying common building insurance and taxes while having money to pay short term maintenance such as mowing, snow removal etc and a long term maintenance reserve for roof, painting etc... You have a long hard job if everything is up in the air.
0 votes Thank Flag Link Sun Sep 5, 2010
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