Submitted by RealEstateToss t3_104boc5 in personalfinance
Hi Reddit, I'm a first time home buyer running into some seriously weird issues with an HOA, and curious about the legality of some of the stunts they're pulling. I'm a veteran using the VA loan. Nothing has closed yet, but things are getting close enough to start worrying. Sorry for the long post, but there's a lot to question.
My partner and I are purchasing a condo unit in Chicago. We have already agreed to a price with the seller, our lender has approved the loan, the appraisal and inspection are both completed as well. When it came time to drop off some money orders to the front office, we started seeing some serious problems.
The building manager was great, up until we handed her the sales contract and the number for money down was still blank. Our lender told us to leave this blank for the time being, just so VA loan stuff could clear and it didn't need to be there until way closer to closing anyway. Here's where the fun starts:
The building manager asked what our "loan to value" was rather quickly and we were stumped, because as newbies, we aren't great with a lot of terms. We told her we were doing a VA loan, and she immediately snaps back with, "oh, so do you have the 20 months of assessment fees available to pay?" We had absolutely no idea what she was talking about and let her know that. She prints off page 22 and 23 of their 40 page HOA rulebook and shows us a clause buried in there where if you put down 0%, you owe 20 months of assessment fees. She did some quick math to show we would end up owing just shy of what a 10% down payment would look like.
She also included 2 parking spots and cable/internet. The parking spots are on a waitlist and we were like 8 spots down, so she pulled those numbers right out of thin air, and the cable/internet is already on the assessment fee and she listed it again. So I'm feeling like it's pretty obvious she's trying to scare us off.
It doesn't end there. She is also requesting we each file a credit report through a company they use, again, after we've already been through this with our lender/bank and received credit scores from Equifax, Experian, and TransUnion. I asked if they could just get this from our lender since it's already been done, and I was given a stern no, it has to be through this specific company. They gave us a number, an extension, ask for "Name". For what it's worth, both of our credit scores are very good. Certainly more than sufficient for this place.
They have also requested that the next HOA board meeting they have, that we meet them remotely so they can basically "interview" us and it sounds like they're going to approve us moving in.
The 20 months of assessment payments WERE provided in the HOA rulebook they gave us, but we didn't receive it at the beginning when we were discussing with the seller. It was also buried in an email with a total of 63 PDFs, only one of which was the rulebook. Everything else was just cover pages, meeting minutes, small potatoes and nothing-pages. No one except the HOA was aware of this 20 month assessment fee. Not us, our realtor, lawyer, lender, the seller, the seller's broker, the seller's lawyer, no one had a clue until we told them the building manager hit us with it and everyone is arguing this fee should have been front and center. Also, none of us (seller's side included) have ever heard of such a clause and we're all in agreement that it sounds absolutely insane.
Our lender told us to basically tell them to kick rocks on having our credit hit again for their report, as this is a pretty bad thing to do during a major purchase. If they want credit scores, they can get them from him if he even deems it necessary.
Our realtor suspects that "voting in" people in the building sounds like something a co-op does and doubts this is even legal. Our lawyer is looking into how they got around this being a form of discrimination.
So, I'm wondering if anyone has ever seen anything like this? How can we hack this apart? Is this stuff even legal? Even if we beat these fees, what are the odds the HOA just messes with us the entire time we're there? It isn't too late to back out and cut our losses, but it's getting way too close to let it go.
Thanks in advance!