A short sale with 17K delinquency in condo fees

Investor · Washington, DC · Member since 2017 · 20 posts · 3 votes

Hello BP community, I am looking into buying my first rental property and I came across a short sale 1Bed 1Ba condo. After looking into it with my RE agent, he informed me that there's a delinquency of 17K in unpaid condo and late fees. Who is the responsible party for these fees? Did anyone have to deal with this obstacle before? Any advice is appreciated!

0 Reply

19 views

Most Popular Reply

Carlos Zapata

Investor · Miami, FL · Member since 2015 · 363 posts · 143 votes

@Joe S. Congratulations, there are a lot of people that just dream to invest and do nothing, Normally the short sale lender pays but you may be surprised that they will give you a counter with you paying those fees,

By the way, rather than invest in a condo with all the restrictions, why don't you find a Single-Family Home for your first investment?

1 Reply

See this reply in the discussion

8 Replies

Jump to latestLatest

Sort by

Carlos Zapata
Investor · Miami, FL · Member since 2015 · 363 posts · 143 votes
9y
@Joe S. Congratulations, there are a lot of people that just dream to invest and do nothing, Normally the short sale lender pays but you may be surprised that they will give you a counter with you paying those fees,
By the way, rather than invest in a condo with all the restrictions, why don't you find a Single-Family Home for your first investment?
1 Reply
Joe S.
OP
Investor · Washington, DC · Member since 2017 · 20 posts · 3 votes
9y
Thanks Carlos. Regarding the type of property to invest in, I live in DC and I feel that investing in condos (with low condo fees) will attract more renters who are looking to live in the DC metro area. However, I am always researching the market and I appreciate your input!
0 Reply
Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
9y
Originally posted by @Joe S.:

Hello BP community, I am looking into buying my first rental property and I came across a short sale 1Bed 1Ba condo. After looking into it with my RE agent, he informed me that there's a delinquency of 17K in unpaid condo and late fees. Who is the responsible party for these fees? Did anyone have to deal with this obstacle before? Any advice is appreciated!
Condo fees have super lien priority in DC. That $17k+ will be paid in full by somebody -- likely lender #1 to protect its interests -- before the condo is transferred to a new owner.
Gimer Law516 Reviews
Website View Page
0 Reply
Joe S.
OP
Investor · Washington, DC · Member since 2017 · 20 posts · 3 votes
9y
@Tom Gimer Thanks! That makes sense, my lender just metioned to me that they have seen buyers pay those fees sometimes but in return, the seller's bank had to accept a lower offer.
0 Reply
Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
9y
Typically, in a short sale it's somewhere in the middle. I know nothing about DC laws regarding condo fees after a foreclosure, but here if the bank foreclosed, and got the property back, the condo is required by law to accept a max of one years dues to eliminate the debt. Therefore, in a short sale situation the lender will typically agrre to pay Only this amount to the condo, so the buyer would have to cough up the rest. Typically we know, from the buyer side, we'll be able to negotiate this down about 50% or better, must it must be done before closing, during the short sale process. So, when this is the case the buyer need some of lower their purchase offer by this anticipated amount, as we Know the bank Willi not pay this amount Andy once you make an offer they won't accept a lower price to make up the difference. You always want to know about these junior liens that may require buyer contribution before structuring your offer. Sometimes you can get a feel for what this number may be if you can talk the right person at the association, lily theirs their at
0 Reply
Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
9y
Originally posted by @Joe S.:

@Tom Gimer Thanks! That makes sense, my lender just metioned to me that they have seen buyers pay those fees sometimes but in return, the seller's bank had to accept a lower offer.
Yes, the buyer ultimately pays them because the lender who is selling short isn't bringing cash to the table. Just factor a chunk of $ going to the condo association first. Figure out the monthly (in DC some condo dues can be shocking) and multiply it by at least six. Then consider in connection with a short-sale that dues, fees and costs beyond those six months would also be a junior lien that would need to be negotiated with as well.
Gimer Law516 Reviews
Website View Page
0 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
9y
Youssef S. One thing to consider is the bank may not accept the short sale because of the HOA lien. The bank may be better off and foreclose (I do not recall but in most states HOA liens are wiped out or reduced) - I would check that in DC as if that is the case the bank may foreclose and never accept a short sale price
7e investments53 Reviews
Website View Page
1 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y
Originally posted by @Chris Seveney:

Youssef S.
One thing to consider is the bank may not accept the short sale because of the HOA lien. The bank may be better off and foreclose (I do not recall but in most states HOA liens are wiped out or reduced) - I would check that in DC as if that is the case the bank may foreclose and never accept a short sale price
In DC HOA has supremacy over the mortgage. (Chase Plaza Condo Assos V. JP Morgan) But if the mortgage is insured, the bank may just choose to let it foreclose so they can collect the insurance on it instead of taking a potentially larger loss in a short sale.
My experience has taught me with an HOA/Condo balance that high, there is almost zero chance of a short sale going through.
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
Website View Page
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.