Can a Condominium Association Prevent a Short Sale?

Real Estate Agent with Allison James Estates & Homes, Sarasota 941-957-3737

The homeowner was relieved after they received the Short Sale approval on their Property, after almost a year of waiting for their property to sell and be approved by their lender for a Short Sale.  Then just before closing, the title company handling the sale of the property discovered that the Condominium Association for the property had not been paid (in over a year) and refused to negotiate the amount owed and would not release the lien on the property.

This is when I received the e-mail ... that stated:

"Troy,  My Short Sale is already approved by my bank and the buyer is ready to close.  Now they (my Condominium Association) are stopping us because they want 100% of what I owe them.  Is this right?  Help! ..."

Before we "blame" the Condominium Association for this one, let's first understand the situation with questions that could clarify what really went wrong.

 •   Was the listing agent handling the sale of the property experienced in handling Short Sales?  This is one of the biggest reasons Short Sales don't work! ... the Real Estate Agent handling the Short Sale for the Seller does not know what they are doing.   It takes specialized education and experience to handle a Short Sale correctly.    Listing your property with someone without Short Sale education or experience can be a huge mistake.

 •   Did the listing agent marketing the property, have a title search done when they listed the property?  Yes, a title search needs to be done up front to determine what liens are on the property.  This is a key responsibility of the listing agent handling the Short Sale and it is vital that the listing agent and title company work together throughout the process of getting the short sale approved.

 •   Does a condominium association have to negotiate their dues?   In the State of Florida, a Condominium Association is "guaranteed" a portion of their dues, even if a property is foreclosed.  Therefore, if a seller is unable to pay their condominium dues, a condominium association can foreclosure on the property or wait for the property to be foreclosed to obtain their dues.   In some cases, condominium associations will negotiate their dues, however they are not legally required to, as there may not be any incentive for them to do so.

 •   Did the listing agent represent an accurate HUD to the lender of all the dues owed, before the lender approved the Short Sale?   All fees need to be disclosed on a HUD, prior to a lender approving a Short Sale.  Getting the lender to approve fees that were not disclosed on a HUD, prior to a Short Sale "Closing" can be difficult, but not impossible.   A good Short Sale Real Estate Agent never gives up.  The secret behind the success of most short sales is the persistence behind the listing agent and above all, the professionism they demonstrate to the lender with correct information.    

In closing, No ... I don't believe the Condominium Association is to blame for wanting their money.   The seller is in distress, is not paying their bills and needs proper guidance.  So who would I suggest did not do their job regarding this situation? ... the real estate agent handling the Short Sale.   

For more information on Short Sales visit   Troy is a Short Sale Real Estate Broker with Keller Williams Realty in Sarasota, Florida.  Troy and his Team have successfully closed over 100 bank-negotiated sales in the Sarasota, Florida area in less than a year.  Troy achieved the CDPE (Certified Distressed Property Expert) and SFR (Short Sale and Foreclosure Resource) certification.    He works with a team of 5 professionals that work together to get short sales approved on a full-time basis.   Their service is Free to consumers facing foreclosure, as they get paid only if they are successful in completing a Short Sale, with the seller's lender paying the real estate commission.

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For more information on Short Sales in Sarasota and Foreclosures in Sarasota, please CONTACT US. We have over 25 years experience in real estate, and have been highly successful in negotiating short sales in Sarasota County & Manatee County, Florida.

Troy Funk, CDPE, SFR
Sarasota Certified Distressed Property Expert
Sarasota Short Sales & Foreclosures Resource
Florida Licensed Real Estate Agent

Allison James Estates & Homes
665 S. Orange Ave. #2
Sarasota, FL 34236
(941) 365-8769

WATCH this Sarasota Short Sale Testimonial Video


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Barbara Le Pine
Advantage Real Estate, serving Lincoln County - Newport, OR
Your agent for the Central Oregon Coast!


I recently heard about a situation where a property did not close (fair market sale) due to the homeowners association having too few reserves for the buyers lender to approve the sale. The buyer really wanted the property and it fell out days before closing. I will be sure to check on HOA reserves, short sale or not.

Your story makes me wonder if many of the members have not been paying, will it will affect the entire complex if the above situation starts to happen on pending sales in that HOA?

Great post!

Oct 19, 2010 06:57 AM #1
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert


Thank you for such an insightful post. Condo fees and liens holding up or killing short sales are common.

As you stated, the big takeaway from your post is Realtors must run title well in advance of negotiating with the lender. Also, the Realtor must interview the seller and ask status of HOA or condo dues. Last minute surprises are never good.

Oct 19, 2010 11:36 AM #2
Sherilyn M. Whistler
ERA Herman Group Real Estate-NoCo - Loveland, CO
Need a Referral, Call Me !

We don't have many condos were I live but a lot of communities with HOA fees - I always learn a wider prospective on your blogs.. Thank you..

Oct 19, 2010 06:34 PM #3
Steve Capen
Keller Williams Realty - Saint Petersburg, FL

Good Post Troy!

Oct 21, 2010 04:45 AM #4
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Troy, As you know, the answer is Yes they can … especially if the HoA files a lien on the property. I am licensed in California. I tell all my clients in short sale situations who live in a condo … you must continue to pay the HOA fees. I get them to agree to this before I list the property. This is a great post! Thanks.

Oct 26, 2010 03:56 AM #5
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