Home Buying in Chicago>Question Details

Barb, Home Buyer in Chicago, IL

So we found our dream home (Chicago). But our realtor is strongly against buying an apartment with no HOA.

Asked by Barb, Chicago, IL Tue Jul 1, 2008

She haven't seen it. The situation is that there was one owner of the buiding (which is a four flat), went into foreclosure. Bank who is the owner now sells units separately. There is no HOA because there is no owners yet. What does it take to establish HOA? Can we buy the place and as first owners in the building establish one? Btw: our lender is ok fincing the purchase. Help!!!
barbara

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(a) consult your lawyer - this is a VERY treacherous proposition
(b) i would be SHOCKED if you could really get a mortgage loan in this scenario. really, very very shocked. it is highly unlikely that you can get a clear title to this property without a homeowners association, and without that, how can you get your loan?
(c) do you know whether there is insurance on the building right now? are the water bills and taxes paid current?
(d) to establish the HOA, you need to first know if the condo declaration or another document creating the HOA exists and was recorded. you will need to call a meeting of all the unit owners for the purspose of electing officers/directors for the HOA. you may possibly want to incoporate (or reinstate) the HOA.
(e) in all probability you cannot create a (legal) HOA on your own as the owner of only 1 of 4 units.

again, i would urge you to work through this with your lawyer.
1 vote Thank Flag Link Tue Jul 1, 2008
Consult with you lender to verify whether you are looking at a non-warantable condo. Here is a warratable condo which means that it meets the guidelines that Fannie mae and/or Freddie mac will buy the loan.

Warrantable condos
A condominium project with features that lenders view as protections against hazards that would threaten the value of condo units. These features include the project being completed with most units sold rather than rented, no one party owning more than 10% of them, adequate insurance coverage of common structures, and an ownership association independent of the developer.

In addition to be warrantable less then 60% of units gan generally be owned by non-owner occupants. Here is a link to my blog on this subject.
http://localism.com/article/560254/What-is-a-Non-Warrantable-Condo
Web Reference: http://www.GregZaccagni.com
0 votes Thank Flag Link Tue Jul 1, 2008
Barb - what's your attroney say? you will need legal docs to set up you HOA, if i can be so bold as to refer an attorney who should be able to give you some solid advice - Larry Lusk - 312-327-3409 or llusk@mbflegal.com. generally it is lack of this type of formality and structure
0 votes Thank Flag Link Tue Jul 1, 2008
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