Ten Things to Know Before Buying or Selling a San Francisco Condominium
In today’s market it is critical to know the answers to the following questions when attempting to buy or sell a condominium. Knowing the answers will help determine the financing available for the property.
- Is the project a live-work (a loft for example) property with a deed restriction? Some lenders will not lend on properties with certain types of deed restrictions.
- Does any single entity own more than one unit in a project that has fewer than 20 units? Lenders typically won’t lend on a property in buildings where one person owns several units.
- Does any single entity own more than 10% of a project with more than 20 units? This creates the same problem as in question 2.
- Is the project currently involved in any litigation? Lenders typically won’t lend on properties with litigation.
- Are there any current special assessments? If the HOA is going to charge an assessment for, let’s say, a new roof, the lender may have an issue with it.
- Concerning Home Owner Association Dues (HOA dues): Are more than 15% of the dues more than 30 days delinquent? Again, this is a typical reason for lenders to deny a loan.
- Are there plans to raise the HOA dues? If the dues are going up, this will affect how much the lender will allow you to borrow.
- What is the percentage of owner occupancy in the building? If too many units are rented, borrowing will be a problem.
- What is the percentage of square footage that is commercial space (ground floor commercial: barber shop, convenience store, coffee shop, restaurant etc)? If this percentage is 20% or more, you may find it hard to get a loan.
- Is this condominium in a building that was recently converted to condos? If so, you’ll need to check on whether the HOA is FHA and/or FNMA (Fannie Mae) approved, and in general whether the conversion was done properly. If it wasn’t, lenders may be reluctant, especially on down payments under 20%.