HOA Rental Policies – Procedural Flaws That Matter

Condo and townhome owners who are serious about challenging an HOA’s rental restrictions should seek legal advice.  An attorney will analyze the interplay between the association’s Governing Documents, HOA records, federal laws, state statutes and court decisions.  That analysis will reveal if the process used to adopt the rental policy contained significant flaws. … [Read more...]

Rental Restrictions – The Third Rail of HOA Policies

Over the past 10 years, many Home Owner Associations have sought to amend their Governing Documents to restrict leasing.  This topic is so volatile, it could be called the “third rail” of HOA decisions.  In fact, one law firm’s PowerPoint presentation on this topic starts with the slide: Rental Restrictions: How to Best Create Dissension and Animosity in Your Homeowners Association.  … [Read more...]

12 Reasons Buyers Need Pre-Approvals

If you were ready to buy a house, would you rather be pre-qualified or pre-approved for a mortgage loan?  In everyday usage, the two phrases seem so similar, it's easy to guess wrong.  You want to be pre-approved.  Here's why. Pre-qualified means that a lender did a cursory review of your finances and stated a general range of what you can borrow.  In contrast, pre-approval requires a mortgage application and the lender verifies your assets, debts, income and credit history. This method yields a more accurate estimate of your borrowing power.   Second question: When should you get … [Read more...]

How to X-ray an HOA #6 – Lawsuits, Judgments and Insurance

Pending lawsuits must be disclosed on Minnesota’s Resale Disclosure Certificate when the HOA is a party to it.  If you are considering a home where the association is in litigation, it is imperative to know what’s at stake.  Is someone suing the HOA over a $2,000 invoice or is the association suing the builder for a multi-million dollar construction defect?  Banks generally don't want to lend money for houses with pending lawsuits and may insist on a higher interest rate to do so.  If you are determined to buy in that complex, first consult an attorney for advice.  I also recommend that you … [Read more...]

How to X-ray an HOA #5- Delinquency Rates, Foreclosures and Short Sales

Buyers should be wary of cash-strapped developers or bank-owned buildings.  Developers and banks tend to lowball the cost of major repairs or improvements.  These groups may also fail to aggressively market the building or fix construction defects.  If the developer still controls the association, review the financial statements mentioned in Part 2 of this series.   Has the developer made the reserve fund deposits on time?  If instead, those payments have been deferred, try to verify the developer’s financial health and reputation.   If it has not already been disclosed, buyers should … [Read more...]

How to X-ray an HOA #4 – HOA Reserve Funds

Good HOA’s, like all good businesses, plan ahead.  Every HOA budget shows how much goes to the reserve fund which pays for capital expenditures as the need arises.   Whether the reserve fund balance will actually meet those needs has been a hot topic in recent years. … [Read more...]

Pimpin’ Your Credit Score

Buying a house is probably the biggest debt you will ever incur.  The lifetime cost of your mortgage greatly depends on your credit score because that determines the interest rate .   You should check your credit reports about 6 months before applying for a mortgage.  This allows enough time to correct any significant errors.  The three credit bureaus are Equifax, Experian and TransUnion.  Each issues their own score but in general,  you want a FICO score of 720 or higher to get the best interest rate.  And since many lenders use the middle figure from the three bureaus as the "correct" … [Read more...]

Dangerous Deficiencies

A common question posed by homeowners in financial distress is "Can the lender get a deficiency judgment against me?"  A deficiency judgment is a charge imposed on the owner when the foreclosure sale price fails to fully pay the mortgage balance.   Whether such a judgment is possible depends upon the property's location because each state has crafted its own rules for this situation.    Numerous websites attempt to explain the mortgage foreclosure process and often provide a list of the states where deficiency judgments are allowed.  Unfortunately, these lists can be wrong.  Many … [Read more...]

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