Condo Association Management Blog

If you are FHA approved Chase has nothing to do with that other than not accepting the offer from a buyer or if there is an issue with the approval for FHA or recent changes in the budget, insurance coverage and reserves as required by the FHA program. You could assist the buyer and their mortgage company with any necessary documents to get the loan approved but a new buyer doesn't have to go through Chase to get their loan. Any lender can use the FHA approval to finance properties in your complex as well as your current residents could consider refinancing using FHA to obtain a lower rate. Chase should have the property listed with a realtor as that is standard bank procedure with REO's so I'd check with the agent as well and see why these offers to purchase are not getting accepted or if it's on the buyer side and not qualifying to FHA program guidelines.

Your explanation of the issue makes no sense. How can there be a bait and switch tatic by the Bank on a single unit? If a potential purchaser does not qualify for a loan you can't force the Bank to make the loan. Additionally, you didn't indicate there was a problem with the bank paying the condo fees, so what is the real concern/issue?

You say that a bank owns one unit out of 11. Since when can one owner demand that a condo association becomes FHA certified? From what you have said your Board has given one unit (in this case a bank) what amounts to dictatorial power to tell your Board what to do. At best the bank has one vote out of 11 because it owns only one unit out of 11. Why is this one owner making decisions, and not the Board? Why do other owners appear to have no say or lesser say than the bank? 
 
You speak of the bank using bait and stitch tactics? First of all, no Board can force any seller to accept an offer. Possibly even more importantly, it is none of the Board's business how the bank - or any other seller - handles or does not handle the sale of a property it owns. Why is your Board involved in this matter? All that should matter to the Board is whether or not the Bank is paying its monthly dues and any other fees / assessments owed to the Association. If they are not doing so, that is the Board's responsibility, so the Board must deal with that, foreclosing on the bank if need be to collect money owed. 
 
You say that it is not legal for the bank to auction off a property. I wonder where you got that information. I would caution you to not give legal advise to a buyer unless you are licensed to practice law.  
 
You may not want to hear this, but I hope you do. It seems to me that your Board may not be functioning as well as you think they are. I really question whether your Board has a clear understanding of what your Board's job is and what it is not in these and other matters. I think that your Association would be well served to contact an attorney who would be able to assist you in determining what the job of a Board is, and possibly even more importantly what it is not, and to help your Board to see where it is on course and how it may need to course correct.  
 
Good luck and best wishes! 

What Lynn said is right on. I just have one additional question. Does the buyer have a real estate agent? If so I am sure there is more going on to the story than you know. From what you are saying the bank accepted this buyer's offer and later changed their mind. This would be breach of contract and any decent agent would know what to advice their client on. 
 
You are concerned about an investor buying your property. One way to help deter investors is to have a restriction in your CC&R that doesn't allow rental in the first year of ownership. If you don't have it yet, you can put it by amending your governing docs.

I don't know about all that legal jargon, but it seems to me that what you're concerned about is having an investor purchase the unit. You likely don't want units to be sold to investors as income property. We felt the same way (12 Unit building) and changed our bylaws to not allow renting except to immediate family members. The board can make hardship exceptions by a vote if need be (especially in this type of economy), but it does keep investors out. It was not as costly as you might think and may be well worth the investment.

This inquiry generates some fundamental questions for both the inquirer and the respondents. Many of the answers have been on target. 
However, it is necessary for all to understand that, separate from a condo meeting lending requirements, the buyer must qualify for a loan from any lender the buyer selects. The seller (Chase) may terminate the purchase offer if the buyer does not obtain or qualify for a loan within a certain period of time.  
As to the request by an owner (in this case, Chase) for the condo to have FHA certification is an extremely valid request. It is not a holding of the condo in its clutches to require this. It is a reasonable request for any owner to make in this market.  
 
As to amending documents, this is an action to take prior to an increase in investment owners and must be an amendment, perhaps requiring each owner to have co-consent of their lender for such an amendment. The challenge to this is the current financial market which makes it difficult to find qualified purchasers - even with FHA approval. An owner needing to sell who cannot obtain a purchase offer that covers their outstanding mortgage, etc, may desire to rent rather than lose their property. The mortgage company backing the individual loan on an unit may be concerned about this and not permit the owner to vote in favor of such a restriction on the property. All of this must be considered in proposing to restrict rentals.  
 
Lynn is quite right in recommending that the condo obtain an attorney for this and other issues.  
 

I'm puzzled by your story. Much of it makes no sense. Chase has bait and switched numerous buyers...come on, do you really think Chase wants to hold on to this little property? Not a chance. Have multiple buyers been unsuccessful in obtaining financing..sure. Weak buyers is not Chase's issue. And buyers can go anywhere for thier financing. If Chase "suggested" getting FHA approval, the they did you a favor because it makes financing a purchase in your HOA easier. I think you are twisting your story's facts to make CHase a bad guy. Investors..not all are bad guys. In my small HOA ( 40 units ) all delinquencies are from owner occupants, not investors.

I think your board (and you as v-p) are sticking your nose into something that does not concern you.

The part about this issue that disturbes me is the fact that a bank can hold onto a foreclosed unit indefinitely and only pay 6 months of dues in arrears when the unit does sell. If banks had to pay all dues in arrears I'll bet they would work harder to sell the unit. I think I read an article once where a condo assn. took a bank to court over this type of situation and they won their case. I would get an attorney to sort this all out. These are strange economic times where the rules are being rewritten every day.