How do I sell my condo without HOA

7 Replies

I bought my condo cheap. It was a foreclosure and I paid cash. There was no HOA fees. However my closing documents showed an active HOA. I was not present at the closing but gave a power of attorney to my agent/lawyer. They signed the documents.

I want to sell the condo and I can't because banks will not finance a condo without HOA. HOA was dissolved in 2015, I bought the condo in 2017. My neighbors who are also owners did not signed for the dissolution and it looks like there was fraud involved. I don't know where to start! Who is paying taxes for the common grounds? What happens if someone buys the land and forces us into unreasonable payments?

@Doina Lechanu This sounds WAY too fishy. I would get yourself to a local real estate attorney pronto.

It's possible to have an HOA without HOA fees, but you raise the right questions. Who is paying for common area maintenance? Master insurance? Capital repairs?

If you can find a cash buyer, you can bypass the bank's requirement for an HOA, but be sure you disclose it in writing to the buyer.

Good luck!

You can find a buyer that has cash, or private money, or they can finance with a non warrantable mortgage. Without an active HOA it will be difficult to find a buyer, and difficult to find a bank to finance it. Another option is to start buying out the other owners, and eventually you can force a buyout of the remaining owners and then you have more financing and practical options.

Normally an HOA would need to either sell or gift any common property before dissolving. This is very unusual for a condo that owns the walls and other common areas. More likely for a townhome style condo. The HOA would also need to settle it's debts. There is also a vote that needs to be done, and this would all need to be recorded with the county to remove the deed restrictions.

It is unlikely anyone has bought the land, it takes years for a tax sale to go through. Even if someone did buy the land it doesn't necessarily mean they can charge rent, restrict people from using the property, or do anything with it. The CC&Rs and other governing documents still restrict the use of the land even if it is no longer owned by the HOA.

There is an underlying issue that led to the current position. Either there was a significant number of people who were underwater, and bankrupt, or some other reason a significant number of people stopped paying their dues, like a disaster that was not covered by insurance and no one could afford to fix. This issue will need to be fixed for the property to be marketable.

The next step is to get a number of home owners together by going door to door to find those who are unhappy with the status quo, hold a special meeting in accordance with the existing CC&Rs or state law, and "restart" the HOA, elect a new board. Then get a reserve study done, start identifying any immediate issues, unpaid taxes, utilities, pressing maintenance, audit any accounts owned by the HOA. This will likely involve a special assessment, and to start having regular dues.

Quickly find a real estate attorney as previously suggested and preferably one who specializes in HOAs. With no HOA, a court appointed receiver may be necessary in order to conduct HOA business until the HOA is reinstated and a Board is seated. The receiver will have the power to levy assessments and pay bills such as insurance.

@Doina Lechanu There are several issues here so take baby steps. Step 1 should be finding out if anyone has been maintaining an insurance policy on the common areas. Get that resolved ASAP before something bad happens. Step 2 is find out about utility bills. Someone must have been paying. 

is this a 2-4 unit condominium association by chance? If so you should be able to get it financed with no active association as long as there is a master insurance policy in place. 

Let me know if I can help 

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