Who should be responsible for the deposit money?

Question

I am a newbie and recently invested into a condo in a 55+community. Told agent and mortgage company this is for investment from the beginning. We didn't have attorney review and moved on to closure. The night before closure, HOA sent us paper to sign stating owner have to live in the property for at least a year and wait in the waiting list for renting due to current renting rate of the community

is high. We communicated with seller agent saying we were not disclosed with this information. The sellers agent was very rude and didn't want to communicate. She simply said kill the deal and re listed the property right away. But she want us to get a mortgage denial letter to get the deposit back. And mortgage already approved and have the money in title company. So mortgage won't give us a denail letter. My agent now want me to prepare for the worst which is lose the deposit. Any advice?

Joseph Cacciapaglia · Answer

Unfortunately, it is your job to do due diligence on the COA rules. A good agent would be helpful with this, but it is your responsibility to read the condo docs or hire an attorney to advise you. That being said, what type of loan are you approved for? Did they approve you based on projected rental income? I might push harder with them to get a denial, based on the new information.

Ultimately, it seems that you did not perform, so you may just forfeit your deposit. If your deposit is very large, maybe you could buy the place anyway and move into it and rent out your current place. Or you could possibly resell it with owner financing/wrap, if that's allowed in your state.

Scott Wolf · Answer

Can we change the name of this thread to "Why you should have a good team, and especially an attorney?"

Your agent should have helped you through this and read the HOA rules. An attorney would have also helped you catch this. How big is your deposit? This may be something you need to eat. At this juncture I would still recommend asking an attorney instead of a bunch of strangers on an internet forum.

Mike Cumbie · Answer

@Shuangshuang Shi

Sorry to hear you are going through this. I have to fall in line with the others on this. When you purchase a property you are the one who has to see if it will fit your "expected use" of the property. As far as disclosing that information the seller most likely didn't know or care enough to remember when they read it many years ago. They were living in it, who cares if it can be rented or not (in their eyes). You bypassed an attorney review and didn't review the HOA documents prior to having any outs left. They are saying you had a contract with contingencies, you passed all of the contingencies the deposit is theirs. You can try and fight, the fact you have a deposit might stop them from selling to someone else. Also your agent may be able to force it to not be in active in the MLS until the EMD is agreed on between you both because there is a contract on it.

Good Luck

Theresa Harris · Answer

Did you not review the condo docs with your realtor prior to removing the conditions on the offer?

Shuangshuang Shi · Answer

@Joseph Cacciapaglia I will contact the loaner again. But as of now, they are telling us money is out, deal is done. Nothing can be changed. We try to tell them the projected rental income is how we are going to pay them back, they don't seem to be concerned.

Shuangshuang Shi · Answer

@Mike Cumbie thank you for your advice. The seller is a flip company. They did not live in this property and bought this property for flipping after the new policy started. They addressed that it is our own responsibility to contact the HOA for any rules and limitations. I like your advice of force them not listing again until we have a conclusion. Thanks again!

Shuangshuang Shi · Answer

@Theresa Harris we read their documents online. There was nothing like this mentioned. We called HOA after received the restriction, and was told that they are not resisponsible for website uodates, and we should have called them for any information.

Who should be responsible for the deposit money?

Who should be responsible for the deposit money?

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