Ask me anything: what do homeowners association dues cover?

If you buy a condo or townhome, you will likely pay dues to your homeowners' association.  What do your dues cover? The big items are hazard and liability insurance, and management company costs (if you have a management company -- somebody has to write the checks).  Dues also cover building maintenance, exterior power and gas, general swimming pool maintenance, gardening, any municipal fees, and garbage pickup.  I tell my clients that the amount you spend in dues usually equals the amount you spend on maintenance and upkeep for a single family home.

Another short sale fail. This time, it wasn't the bank's fault. And there's a moral to the story, of course

This is 1200 Flores in West Hollywood.  It is up the street from Marix, the fun and famous Mexican restaurant.  My buyer client lives in one of the units and learned early in the year that it would be short-saled.  We submitted an offer as soon as we could -- in April -- and went through the normal short sale waiting (and waiting) period.  The sale was approved in August.  Yay!

However, because the sale hadn't been approved, the listing agent didn't order the documents that the lender needed from the home owners' association until the approval was received.

Fun real estate fact: in addition to buyers, lenders need to review home owners association documents.  They don't want to fund loans on units in buildings with lots of "distressed" (short sale, foreclosure) units, they want to make sure the reserves are adequate, etc.  And they don't want to make loans on buildings with litigation because, obviously, a negative outcome can affect the financial health of the HOA.  

Okay, the documents are ordered and it turns out there IS litigation on the property.  The buyer/tenant had no idea.  Getting info about the lawsuit was like pulling teeth.  The HOA management company wasn't too interested in talking to the lender or me, the listing agent wasn't interested in assisting us, and the HOA president didn't understand the seriousness of the problem.  The lending machinery came to a standstill.  We tried lots of stuff, but couldn't get the litigation to settle.  The listing agent pulled the plug on us last week as he has cash offers and doesn't want the bank to foreclose (in fairness, he had given us extra time to get this sorted out).  After six months of agony, my buyer is content to let this set sail.  He still lives there and will be living there for the time being.  So, no loss, except for many hours and our tolerance for this process.

Moral of story: if there's litigation on a condo complex, even if it's up the street from delicious Mexican food and margaritas, run the other way!

Busy week in the home buying and selling world

It's been kind of a crazy week, and I know you all love the dirt, so here goes: First, I'll soon have a gorgeous, almost entirely brand-new home in Toluca Lake on the market. It's about 3,000 sf and will list for $1,297,000. We are working on staging now with pictures to come and then I'll have all the info here.

1429 N. Rose, Burbank is in escrow and all is going well, so far, there. The buyer just did her home inspection yesterday, the pest inspection was today, etc. This won't close until the end of October. By the way, the two cats (pictured above) that live at Rose now need to be rehomed. They are twin black and white kitties, about four years old, can live inside/outside or both, and are very sweet. They were born in Brazil and can meow in Portuguese! Any takers?

Next, there's the Ben Mar home in Burbank. That has NOT been a fun transaction so far. I will have a long post about this baby when it closes. For right now, I can tell you that the buyers and I celebrated the removal of all contingencies last night at Bow and Truss in NoHo.

Then there's the short sale condo in West Hollywood. Jeez, as if short sales weren't bad enough...when a condo is sold, both the buyer and the buyer's lender need to look at the home owners association's financial and governing documents. And getting the HOA documents in a timely manner is ALWAYS iffy. In this case, it's been an extra hard tooth-pull. And we learned that there is litigation against the home owners association from a disgruntled former resident. That's a red flag to the lender. At any rate, it's been one of those 50-emails-a-day transactions this week for me and everybody else concerned and I hope to have this sailing smoothly early next week.

Enjoy your weekend, everybody!

House (tale of woe) of the week and news you can use

The house pictured above is a foreclosure in Burbank's Rancho district.  My clients, who are well qualified and have been looking for a home for over a year, made a very smart, clean offer on this cutie. The dollar amount offered was in line with comparable neighborhood sales.  Alas, we learned that another higher offer came in at the same time.  We countered, but ...sigh.  Stay tuned for the outcome.

Now on to the really good news: mortgage interest rates are hovering around 4%, with points, for a conforming loan.  Jumbo loans have rates at low as 4.75%! Nobody is predicting an interest rate rise any time soon, either.

And here are a few tidbits for condo owners.  California has passed a law permitting solar panels to be installed on any condo.  An HOA can issue restrictions, but those restrictions can't be prohibitive.  Also, all condo projects and HOAs must now allow pets! Yes, once again, an HOA can issue restrictions (like a weight restriction, for example) but the restrictions can't be prohibitive.

Own a condo in Burbank or the San Fernando Valley? You may wind up paying your neighbor's bills

Here's a story from today's L.A. Times (yes, again) regarding condo associations and how finances are handled, especially when several home owners association members are in foreclosure.  Yes, the remaining members have to take up the financial slack.

What the article doesn't say is that it can be very difficult to sell a condo, even if you're not in arrears in your dues, if the HOA finances aren't healthy.  That's because banks don't want to make loans on these projects -- they believe, rightfully so, that the value may decline due to lack of reserves, inability to pay for maintenance, inability to pay insurance, etc.  Just this year I've experienced this for condo projects in the north San Fernando Valley, Burbank, Toluca Lake or Studio City.  If you are interested in purchasing a townhouse or condo in any of these areas, please contact me and we'll find out about the Association's financial health before you make an offer.

Everybody makes mistakes, even title companies and management companies

Long, boring story short and boring: my buyer client has an accepted offer on 1809 Peyton in Burbank, but the condo must "go" FHA in order for him to get a loan.  Fine.  Reams and reams of paperwork need to be submitted to FHA and the condo documents have to be examined in very close detail.  Fine.  But it's been about 60 days now, and the listing agent is really steaming over how long this is taking. Fine, but don't tell him that.

Just yesterday, the FHA folks noticed that the preliminary title report from the title company was wrong -- it had a map of a building down the street. Considering how much title insurance costs and how many people view the title company documents, this is pretty surprising.  And, the building's management company had certified that the complex had 46 units in it when it only has 42.  Nice to know they are collecting the HOA dues in that building.  Aberdeen has made several paperwork mistakes in this transaction, but you'd think they'd at least know how many units are in one project.

So these conditions have now been caught and remedied by the lender at Prospect Mortgage, Dana Dukelow, and his staff.  But the listing agent would still like to kick us out of escrow.  Stay tuned...