COOP HOA sold property to me, that they offically didnt own

Buying & Selling Real Estate
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COOP HOA sold property to me, that they offically didnt own

Tom Server
Member since 2023 · 118 posts · 26 votes
Want your thoughts on this. So, I am in the middle of purchasing a co-op unit for a flip. The property is being sold as-is / cash only by the management/Hoa of the development. The original owner stopped paying the taxes and HOA.  The property is a rehab and in need of new everything so i couldn't get a mortgage.  I put a security deposit down of 10k. I've hired a title agency for the closing. So, I'm waiting and I'm asking what the status is and not getting any response from anyone. My realtor who is also the selling agent, said she tried getting info form the lawyers and the Hoa. but no one is giving her a straight answer. They first said they were waiting on court papers, then the following week they said a court date. I don't know what to believe now. It's been 3 months. everyone is in the dark. I reached out to the lawyer of the Hoa for information on Thursday and still haven't heard anything back from them...

My friend who is an attorney did some research for me.  The property owner defaulted on the property and owed back taxes and HOA fees ... The Hoa won in court for the back payments, but I believe the courts denied the Hoa of getting the shares back and taking ownership

So, I'm thinking they illegally sold me the property.  The Hoa weren't full owners of the property yet.

Now what do I do?  Like I said I still haven't heard back from the Hoa lawyers asking for transparency. If that is the case people are saying I could sue, but do I sue for ?   I just wanted to have a quick flip and make 40k.   I was also thinking of telling them instead to reduce the price 10k and ill wait til all the court stuff is done and the HOA takes full ownership

THOUHGTS?

  
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Peter Walther
Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
2y

I'm a little confused.  With a co-op you don't own the unit, you own shares in the corp that owns the building and all the units with the shares having an exclusive right to use a particular unit.  Generally, you can't get a mortgage since you don't own real property to put a lien on.  You get a commercial loan with the shares being the security for the loan.  Since there's no mortgage there's no foreclosure only an action on the Note asking for transfer of the shares.  If you get a title policy, it will insure your leasehold interest not a fee.

Also, I believe there's no HOA, only a BODs of the corporation that handles its administration. There may be a management company but no HOA.

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    I would assume their realtor is morally if not legally responsible to see if they have the right to sell it? So far I assume you have the right to cancel and get your EMD back if you want it. Not much else, if anything.

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  • Tom Server
    OP
    Member since 2023 · 118 posts · 26 votes
    2y
    Quote from @Bill B.:

    I would assume their realtor is morally if not legally responsible to see if they have the right to sell it? So far I assume you have the right to cancel and get your EMD back if you want it. Not much else, if anything.


    well the realtor is dual agent (buyer and seller.) so would they would be responsible also ? I dont think so.. how would they know if the HOA hired them to sell the property

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    Imagine if I hired that realtor to sell your house and give me the money. If you found out you wouldn’t hold that realtor responsible in the slightest for letting me list your house for sale? Seems like finding out if the person hiring them has the right to sell a property should be step 1?

    1Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    2y

    Whether the realtor should have searched the court documents to see if the hoa had legal right to sell is a moot point (I would have but most would assume the hoa had completed the process). Your choice now is to wait until the hoa gets title, assuming they actually will which is another question, or cancel(when the closing date passes) and move on. If you proceed, make Sure you buy an Owners Title Insurance policy. You have no damages at this point.

    1Reply
  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    2y

    @Tom Server if the seller is not the one listed in our current tax records, we normally require the documentation that they have the right to sell before we can list it.

    1Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    2y

    I'm a little confused.  With a co-op you don't own the unit, you own shares in the corp that owns the building and all the units with the shares having an exclusive right to use a particular unit.  Generally, you can't get a mortgage since you don't own real property to put a lien on.  You get a commercial loan with the shares being the security for the loan.  Since there's no mortgage there's no foreclosure only an action on the Note asking for transfer of the shares.  If you get a title policy, it will insure your leasehold interest not a fee.

    Also, I believe there's no HOA, only a BODs of the corporation that handles its administration. There may be a management company but no HOA.

    2Reply
  • Tom Server
    OP
    Member since 2023 · 118 posts · 26 votes
    2y
    Quote from @Peter Walther:

    I'm a little confused.  With a co-op you don't own the unit, you own shares in the corp that owns the building and all the units with the shares having an exclusive right to use a particular unit.  Generally, you can't get a mortgage since you don't own real property to put a lien on.  You get a commercial loan with the shares being the security for the loan.  Since there's no mortgage there's no foreclosure only an action on the Note asking for transfer of the shares.  If you get a title policy, it will insure your leasehold interest not a fee.

    Also, I believe there's no HOA, only a BODs of the corporation that handles its administration. There may be a management company but no HOA.

    Think you maybe right. They have a HOA and a management company. Doing some research online with the court documents. Management went to court and won backpayments of fees from the previous owner. The last judgement to get the sharesback were denied. 
    But i was told that management was able to get a warrant and clean out the unit of junk that the previous owner had left.  So I dont know whats next.  I wrote the attorney and they still did not respond to me.  
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  • Tom Server
    OP
    Member since 2023 · 118 posts · 26 votes
    2y
    Quote from @Bill B.:

    Imagine if I hired that realtor to sell your house and give me the money. If you found out you wouldn’t hold that realtor responsible in the slightest for letting me list your house for sale? Seems like finding out if the person hiring them has the right to sell a property should be step 1?

    Its a 200 unit complex being where she had listed and sold multiple units for them. Im not a relator, so i dont know the steps.. but I would think if i sold for a complex multiple times and the unit is empty.. therw wouldnt be any issues. 
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