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Can condo association board deny cash buyer for unit?

Posted on Tue, Feb 22, 2011 @ 05:53 AM
Can a condo association board deny the purchase of a unit to a buyer who pays in cash, has no mortgage and offers a security deposit to assure maintenance fees solely on impaired credit? There are no public records, no criminal records, no bankruptcies, no foreclosures and the credit problem was fully disclosed upfront when making the application?

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Why would you want to do so? Unless your Association's Members are flush with money it is unfair to the selling Member to deny him a sale; and it is unfair to the buyer because he is offering you total protection, most likely more than any other other owner.

posted @ Tuesday, February 22, 2011 6:23 AM by Steve Rubin

I agree with Steve Rubin but I would remind the questioner that these are tough times in real estate and it's better to have someone in a unit than not.

posted @ Tuesday, February 22, 2011 6:27 AM by Danny Greenberg

The Condo commanders live in a cocoon not knowing this a new world from just a few years ago. There are an estimated 70 million Americans today with impaired credit score and these condo jerks lump everybody in the same boat as the deadbeats who always have poor scores because it reflects their life styles. 

posted @ Tuesday, February 22, 2011 6:33 AM by Gunther Karger

Gunther, Steve, Danny, you're all right on the button.  
Not only is the questioner off the mark but also he originally posted it to a question unrelated to his question.  
Tell it like it is.

posted @ Tuesday, February 22, 2011 6:46 AM by Peter Spencer

It astounds me at the lunacy of some of the scenarios that these BOD think they can control or prohibit people from purchasing a unit. Do they honestly believe they can force someone to finance a unit? Truly? Are they living in the USA? Where is this unit? Push back and push back hard.  
And just for the record, as a CMA statement: All things are legal that are not illegal, and "that IS" what's scary. So, check the laws, too, just to make sure we are all in the right. And a friendly call for a free telephone consultation to just about any lawyer will do. 
BTW, not the same thing, but 'somewhat applicable'. Local "lodging" facility made up some questionable policies in this area. Heard rumours about their wranglings. I have NOT checked out to even see if it went to court or not. But I sense there was some chain yanking with attorneys knowing "OF" some of the mouthy parties I heard talking, if you know what I mean. Anyway, this 13 year old, attractive, 143 room good looking facility is ON THE MARKET NOW... OR YOU CAN BUY THE NOTE FOR... WELL, STARTING BID, AND I just have a 'feeling' not a lot of people are going to bid, but what do I know? It's at or offering for $500,000. My point, a legal mess can cost a BOD or business money and they could lose their fanny. YOU SEE, LAWYERS CHARGE AND CAN FILE LIENS, TOO, IF THEY ARE NOT PAID.

posted @ Tuesday, February 22, 2011 7:01 AM by Sheri

Should either the buyer or the seller opt to sue the board for discrimination the board will lose. The financial penalty that could be imposed could cripple the association. One,by federal law, cannot dioscriminate in the real estate market place.

posted @ Tuesday, February 22, 2011 7:23 AM by Scott

What is stopping buying and seller from the transaction? Why does the board have a say in this? Is it in the bylaws that the board has to ok everyone that moves into the community? 

posted @ Tuesday, February 22, 2011 8:12 AM by Victor

Steve: The general agreement here is obvious, however, if your Associations by-laws or other Association documents contain such language that allows the Board to approve or disprove the sale, they MAY have that right. As other have said, Federal Law may be violated. 
Common sense says the Board needs to re-examine their rules and ease off some. Tainted credit is very, very minor compared to other things, say like child molestation, felony arrests and the like. 
Cash is KING says I, sell to the person and get a paying new member. 
One other thing, Board Members can be personally liable in certain matters, I don't know if this is the case here but they better check. Read Scott's comments. Finally, I couldn't find anything in F.S. 718 that addresses this issue. I'm no lawyer or professional manager but I believe the Board has made a misstep here.

posted @ Tuesday, February 22, 2011 8:19 AM by cebo

Answer: The bylaws allow the board to approve all transfers and buyers. They apparently can deny the buyer based on credit score, even if the buyer pays with cash in full.

posted @ Tuesday, February 22, 2011 8:19 AM by Gunther Karger

Gunther so you saying the buyers credit score was bad?

posted @ Tuesday, February 22, 2011 9:07 AM by Victor

If your condo docs give the Board the power to approve/disapprove who buys the unit, then the Board has the power to approve or not approve however the Board decides. Even if the buyer has a great credit score.

posted @ Tuesday, February 22, 2011 9:32 AM by Marriage Counselors

The last vestige of the Divine Right of Kings lies in the arms of a CO-OP Board in New York City. However, this is not quite the case for Condos and HOAs.  
I would let the buyer in.

posted @ Tuesday, February 22, 2011 9:39 AM by John Radbill

I am a licensed CAM, I have also been on several Boards.  
If the condo docs give the Board the right to approve / disapprove (right of first refusal), they may disapprove the person for whatever reason and don't even have to disclose that reason because under Florida Statutes, any information obtained in the lease / sale of a unit may not be disclosed.  
Since when did a person's cash / credit status = discrimination? The legal definition of discrimination is: 
Discrimination is the unlawful and intentional act of unfair treatment of a person based on race, ethnicity, sex (gender), religion, national origin, physical or mental disability, and age. Some states have laws that also protect against discrimination on the basis of marital or familial status or sexual preference.

posted @ Tuesday, February 22, 2011 10:55 AM by Joyce Nord @ bestcondomanager.com

This board may be suspicious of someone who has poor credit and buying cash. One thing comes to mind ...drug dealer?  
Another thing I have witnessed (of course when the economy wasn't as bad) is that in general, those with poor credit scores and who disregard their credit tend to disregard the rules and regs and can often be trouble in the community.

posted @ Tuesday, February 22, 2011 10:58 AM by Joyce Nord @ bestcondomanager.com

Joyce we don't even know if the cash buyer had a bad credit score. 

posted @ Tuesday, February 22, 2011 11:15 AM by Victor

Victor, the original poster used the words in their question: 
"impaired credit" 
"credit problem was fully disclosed" 
I think it is safe to assume that if prospective purchaser had impaired credit and a "credit problem", obviously he/she had a poor credit score. 

posted @ Tuesday, February 22, 2011 11:22 AM by Joyce @ thecondocommando.com

Joyce I defer to your superior reading skills :) 
PS at least on this post ;)

posted @ Tuesday, February 22, 2011 11:25 AM by Victor

Answer: Yes, the cash buyer does have somewhat poor credit score reflecting a problem incurred during the financial crisis. To overome this, a security deposit covering six months of maint pmts was offered, besides the cash for the purchase.

posted @ Tuesday, February 22, 2011 11:27 AM by Gunther Karger

The answer remains the same...the Board can approve or disapprove for any or no reason at all. They don't even have to give you a reason why, and it would not be considered discrimination (in contradiction to Scott's statement). 
Under F.S. 718.111(12)(c)2 (records not accessible to unit owners): 
"2.Information obtained by an association in connection with the approval of the lease, sale, or other transfer of a unit." 
Florida Statutes may be found here: 

posted @ Tuesday, February 22, 2011 11:37 AM by Joyce Nord @ bestcondomanager.com

My take on this is that the buyer is trading down and using what equitty was left in his old property to pay cash for this one. The board my be too obtuse to see this. A lot of folks lost a lot and are starting over in this brave new world with whatever they can salvage. The board is looking for a lawsuit since the seller could sue over the loss of the deal and subsequent damages based on the board's refusal to take the reasonable offer of extra security. The buyer can also sue if there are allegations of discrimination.  
I am so glad to be finallly dumping this condo and moving back to a single family home with no hoa. It is worth every cent.

posted @ Tuesday, February 22, 2011 2:01 PM by condo hater

In this case, the cash to buy the condo is cash the buyer has having nothing to do with any house. The buyer is simply retiring, can't sell the house and is doing a short sale or deed in lieu. That's where the credit score problem comes from.

posted @ Tuesday, February 22, 2011 2:12 PM by Gunther Karger

In this day and age anyone can sue for any reason; however, proof lies on the part of the plaintiff as well as proof of damages. 
However, most condo docs that provide for right of first refusal and/or approval specifically state that the board may not be held liable for not approving a potential purchaser or leasee. 
I will probably say this 20 more times in answering blogs here. If you purchase a condo, read your condo docs and understand the state law of what you are buying into. Many of these restrictions are created to protect the value of the community. If you don't like it...don't buy.

posted @ Tuesday, February 22, 2011 2:15 PM by Joyce Nord @ bestcondomanager.com

very informative and interesting blog. 
Thanks for sharing:-) 

posted @ Wednesday, February 23, 2011 6:23 AM by spencer iowa real estate

Joyce your brief post said it all. Buyer beware coupled with ignborance is no excuse says volumes about this situation.

posted @ Wednesday, February 23, 2011 11:05 AM by Scott

I am the Pres. of the HOA in Ga. and have been thru 14 foreclosures ( Investor) I would be happy to accept that buyer and his 6 month deposit. It is no longer a detriment when someone who retires has to walk away from a home, most are underwater anyway and buyers are hard to come by. I would rather have the monthly Assessment and a owner occupied unit.

posted @ Saturday, February 26, 2011 10:59 AM by Dagmar

What is the law on minutes from board meeting,if you can not attend.i though the managment had to post minutes within 3 days is that so??????

posted @ Thursday, March 03, 2011 4:56 PM by donna

Lets say someone with a felony does buy a condo, cash and has a felony. He now owns it. And the condo association denies his membership. Now what happens?

posted @ Thursday, November 15, 2012 10:05 AM by Ed

I don't know where someone would get that much cash to completely buy a condo. I have had really terrible credit my whole life, so I have never gotten close to buying a condo. I have heard however that there are mortgage brokers that help out people with bad credit. Maybe there is still hope for me. http://www.ralainvestments.com/bad_credit_mortgage.html

posted @ Wednesday, July 30, 2014 2:30 PM by Edmond Vandergraff

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