Condo Association Management Blog

A credit check wouldf be a smart idea. But before proceeding suggest you wait to see is bid is accepted. If the bid is accepted and buyer gets a mortgage you may wish to demand copy of that mortgage and then proceed from that point.

 
I have several rental properties and am on the board of directors of an HOA, so I understand totally from where you are coming from. 
 
To obtain a credit score ,you will need to get permission from your prospective renter or buyer and some personal financial information. You are neither renting the property or loaning money, so you have no right to demand or even ask about the financial stability of a prospective homeowner; and they should not comply with your request. I know I would not.  
 
Each inquiry is a hit on their credit score in a negative way coming from an outside party doing the inquiry. 
 
Furthermore, the inquiry, imho, appears to be in violation of the Fair Debt Collection Act. Federal statutes on Fair Debt collection do apply to HOA's and Condo associations as non-profit corporations. i.e., It is unlawful for an HOA or Condo Association to *publish* a list of those persons who are late in paying their assessments in the HOA newsletter or on any public list or discussing it in open meetings.  
 
So, my take is that if a credit check was done on any potential buyer, possibly both their civil rights would be violated (financial discrimination) and Federal laws possibly violated. Depending on where you live, you should inquire an attorney's opinion.  
 
i.e., The housing financial discrimination act is set of laws in California regarding discrimination in financial housing practices. Commonly known as the Holden Act, the 1977 anti discrimination act makes it illegal for banks and other financial institutions to discriminate in the "provision and availability" of housing loans being offered. More specifically, financial institutions prohibited from using irrelevant aspects of either the property or individual to make housing loan decisions. Common reasons that constitute housing discrimination include geographic location, neighborhood, as well as information about the individual such as race, religion, age, or disability. In certain cases, however, some reasons can be determined as legal if there is a business related justification for doing so. If lenders act in violation of these laws, there may be penalty in the form of monetary damages. 
 
In my opinion, you are treading on shallow ground here and I would intrude on the rights of any citizen to obtain a loan or prohibit them from living where they can legally live. I would advise you to abandon the idea of additional screening of applicants to live in your Condo Association. 
 
We have absolutely no reserves in our association and the leadership does not see any reason to have reserves. It's crazy, I know, and it drives me nuts. I'm going to try to sell because of all of the negative impact of the foreclosures and possible issues that could arise. 
 
You need to trust that any bank loaning money will be aggressive with their underwriting and not lend to anyone marginal.  
 
As an association, be aggressive and wise about collecting on any past due bills. I'm afraid our association has "loose lips" and are going to cause a lawsuit. I've "been there" before in another state, so I know lawsuits do happen to INDIVIDUAL board members of a Condo/HOA association... and Chubb insurance won't protect you for violating laws that you knew were laws unless you have a fantastically written policy, which I doubt most Condo or HOA's have. Ask me how I know this. If a lawsuit happens, you could be kicked off the board and you will not be covered...typically. 
 
These are my opinions and I am not a lawyer. Just have had a little bit of experience that says, "no", to your inquiry. 
 
Education is what you get when you read the fine print. Experience is what you get when you don't. -- Arthur Levitt  

CORRECTION, I MEANT TO SAY, "In my opinion, you are treading on shallow ground here and I would NOT intrude on the rights of any citizen to obtain a loan or prohibit them from living where they can legally live. I would advise you to abandon the idea of additional screening of applicants to live in your Condo Association."

I'd rather do a background check before a credit check. We made the mistake of having our atty do a sex offender background check to save money (paid him $50). Once the new owner moved in, we discovered all types of criminal activities she was involved in to include having her real estate broker's license revoked for theft of deposits, restraining orders against her from various men, and now she has herself nearly barricaded into the condo, refuses to open the blinds, and only comes out when it's dark to run to the supermarket. Do yourself a favor and get a background check, even if it's only from the public records.

I think it would be a good idea to have a security deposit put into escrow and held there indiffently unless the owners decided to sell out of which they would get the money back with interest.. This would insure any owner who becomes behind that the money would be there for their association to deduct. Maybe then owners would not get so far behind with their fees. We have 3 people right now behind in the total of 17,000. We are a small association, so you can see that takes a big bite out of our account. 
 
Cannot figure out how they were left go to get that far behind, but then again this is just one of the problems we are at facing.

The short answer is "no." It is not your real estate, it is on separate title, and you have no legal interest in it. You have legal means of obtaining dues, if the new owner is in default. The condo corporation can not dictate to whom property may be sold on this basis.