We are looking at a condo, but have a few concerns. One person owns 4 out of 14 condos in the unit. We are concerned about 3 things: First, will this

Asked by , Thu Jun 24, 2010

be an issue in getting a loan. Second, will this make my HOA a nightmare, where 1 person has so much control. Lastly, will this be an issue when I go to sell down the road?

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Julie Rice T…, , San Mateo, CA
Thu Jun 24, 2010

Good for you for asking such a great quesiton and doing the research on your condo in advance! Yes, it is an issue to qualify for a loan if one person or entity owns more that 10% of the units in the condo project. The reason this if of concern to the lender is if that person runs into financial difficulties, that one person could financially ruin the HOA.

In your case, this one person owns almost 30% of the units! You may still be able to get a loan if you are very well qualified, as this will lessen the lender concerns about the condo project and they may only request a limited review of the project.

With all of that being said, I believe you have reason to be very concerned for all three of your state reasons. Maybe talk to a few of the other homeowners and find out about the HOA from their perspective.

Good luck with your decision!
Julie Thall

Web Reference:  http://www.lmglending.com
1 vote
Gregorio Den…, , San Diego, CA
Tue Jul 6, 2010
Julie has this one right, it will be an issue with one person owning more than 10%. It can be done, but usually at a higher premium and with much more work. Are you absolutely in love with this condo?

Gregorio Denny
Tripoint Mortgage Group, Inc.
Web Reference:  http://WeFixRates.Com
0 votes
Dorene Slavi…, Agent, Torrance, CA
Tue Jul 6, 2010
Dear mab1320,
Well it sounds like you have either, the builder as owner of some of the condo's ...or an avid investor. Many CC&R's won't allow this, and it will have an effect on your loan a well. Have your agent investigate further, and your buyer agent will also have loan officer to ask as well.
0 votes
Emily Knell, Agent, Huntington Beach, CA
Thu Jun 24, 2010
You won't know for sure until you contact a lender and see what the current guidelines are. Other things the lender will want to ask the HOA is what is the ratio to owner occupied units vs. non-owner occupied, 48-49% is normally the cut off, exceptions are possible if at 50%. So, this one person owning 4 units may not be your only issue.

For a quick response, send an email to Danny Baldwin at Pacific One Lending at DBaldwin@Pacific1Lending.com put in the subject line: "ques. re: a condo for Emily Knell"

Even with the owner vs. non-owner occupant issue, when you go to sell, if the ration is say, at 35% today, it could be higher in the future. It can hurt your future value if the condo community becomes a "cash buyers only neighb" in the future.

562-430-3053 cell
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