Condominium
A unit inside a larger building or complex. You own the inside of your unit and share ownership of hallways, roof, and grounds with everyone else. Monthly HOA dues pay for maintaining the shared parts.
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Where this comes up in a sale, and what follows
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Part 1 of 4
Why a seller cares
Selling a condo means selling a unit plus a share of the building, and the buyer's lender underwrites the building too. A healthy HOA sells with the unit; a troubled one can block the buyer's loan.
Part 2 of 4
A simple example
Your condo is under contract at $240,000. The lender requests the HOA's questionnaire, budget and reserve study before approving the loan.
| What the lender looks at | What can happen |
|---|---|
| A funded reserve, no litigation, mostly owner-occupied | The loan approves like any other |
| Half the units rented, thin reserves | Some loan programs decline the building |
| A pending lawsuit against the HOA | Many lenders wait it out, and so does your sale |
A condo sale is two underwritings: the buyer and the building.
Part 3 of 4
What people get wrong
That the HOA has nothing to do with your buyer's loan. It has everything to do with it, and the seller cannot fix a weak HOA in six weeks.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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