WSJ: How a Condo Association Could Kill a Sale

If you are considering buying or selling a condo, you might find this article in the Real Estate section of today's Wall Street Journal interesting. Some key excerpts:

Mortgage lenders are stricter when financing condos and may decline a home loan if the condo association isn’t financially stable.

...

Lenders are stricter when financing condos because the homeowner isn’t solely responsible for maintaining the value of the property. When someone buys a condo, they’re also purchasing an ownership share in common areas ranging from the grounds to shared amenities. These are managed by the condo association, whose officers are elected by fellow residents.

... Lenders want to ensure [Homeowners' Association] dues sufficiently cover not only routine expenses but also any major outlays for repairs or unexpected expenses, such as a damaged roof ...

Another red flag for lenders: developments where more than 10% of units are owned by one investor ...

If a condo association has insufficient reserves, it may have to raise dues or charge residents a one-time assessment ...

... a lender will investigate any pending litigation filed against the condo association.

You can read the complete article here.