Who is negotiating with the HOA? I assume an attorney or title co that is experienced in short sales and is negotiating all the liens on the property that you are purchasing. That would be the person to discuss the probability of the HOA accepting an offer. I've seen it happen both ways and each HOA is independent and makes their own decisions.

BTW I read that Maryland law a little differently than what you stated. At $1200 the HOA lien becomes a priority lien in front of the mortgage lien. This is a good recap of the Maryland law concerning HOA liens: https://www.nolo.com/legal-encyclopedia/maryland-hoa-coa-foreclosures.html

What is the price of the house? What are the monthly HOA dues? What is the breakdown of the $9K - dues, late fees, collection fees. I'm on the BOD of an HOA and we make decisions on delinquent dues. Our collections attorney works on the cases (and does any negotiation) but if any part of the outstanding balance is to be written off the BOD has to approve. I can tell you we would not approve $3500 payment on a $9000 balance. Expected income or not - in my experience homeowners want far more done than the amount of dues they are willing to pay so the income may be much needed even if not expected.

Thanks both, I really appreciate the insight!

@Denita it is all flowing on the seller's side as its their hardship, I believe the short sale attorney and seller's agent are in communication with the HOA. Sadly very poor communication coming in to me, so limited details, which is leading me to reach out more. Everything I've read stated that it caps at $1,200 if foreclosed as they arent the primary lien, so they are capped in what priority value they can claim before the lender who likely takes the bigger loss. "Maryland law states that if a mortgage or deed of trust holder forecloses, four months’ worth of unpaid regular HOA or COA assessments for common expenses (not including interest, collection costs, late charges, fines, attorneys’ fees, special assessments, or any other costs) or $1,200, whichever is less, get priority over a first mortgage or deed of trust recorded on or after October 1, 2011." Was the common quote ive seen.

@3katz4me price of the house is $245k (townhome), maybe 10% lower than comparable sales of slightly nicer homes not in short sales. Not sure of the breakdown as they wont provide it to me as the buyer (at least yet), but HOA is $56/month, may have been lower before. I would figure on the outstanding balance they wouldn't accept, but in the 6ish years he was living there the HOA, if somehow he never once paid the principle would be around 4,200 (though I doubt he never paid it). So I believe the majority of the balance is late fees/legal fees to create the lien (technically havent gotten confirmation that it's a lien but would be my assumption at that amount. FWIW this HOA basically cuts grass and has snow removal on the road, along with maintaining grassy common areas; no amenities, roof/exterior repair coverage like some others, a lot of the cost is the price to contract out most of the admin/collections work. I also don't know if its the board or the company contracted to handle admin duties that makes this call. Im also on board with it being a poor setup that excuses debt for the seller, IMO that should be carried over as it can be with foreclosures (though believe they have to sue for that). I just ethically hate the thought of paying for someone else's debt coming in as someone who has never missed a credit payment of any kind and is buying a home for the first time. I'm already stuck handling things that have to be fixed up due to the as-is status (probably around $5k), so mitigating any additional cost when slightly nicer, brand new constructions are selling for 30-35k more just up the road. In your experience, do you have an average timeline of resolution in instances like this and how often the buyer ends up having to kick in vs the seller/their lender/FHA covering it?

Depends on the state but you might want to see if there are also several years of property taxes due. Some states allow counties to collect delinquent HOA fees. Once turned over the the county they are no longer on the HOA records.

@maifleur03 it's Baltimore City (not a part of a county like most cities are), not sure what their rules are regarding that but haven't heard of those instances before. From what i've heard mortgage and property taxes were up to date at least until the home was vacated, I think the lender usually covers property tax from that point until the sale can go through in these instances. It seems they are sometimes tied to the unit rather than the owner, which is frustrating as one cannot factor that liability into the offer/negotiation price. I do believe in our contract it does state that the title needs to be free and clear though, so potentially help from the title company/title insurance on the seller/lenders part?

Here real estate property taxes are always tied to the property. I have never heard of an area where it is tied to an individual other than in the division of proceeds. I question if this is a short sale or a foreclosure. Only if it is a foreclosure would the lender have any tax liability. Always interested in learning how things are handled in other parts of this country and world.

That part was in reference to the HOA dues/late fees/legal fees the seller owes, which to my knowledge are the only outstanding balance between a free and clear title that can come to me. Property taxes transfer on the date of closing, so anything prior to that won't be an issue for me, I believe the seller's lender is/has taken care of things on that front.

Property taxes are tied to the unit (property). Are you referring to other types of taxes due at transfer? Here we have doc stamps on the deed which is a tax due at closing paid by the seller. Your attorney + real estate agent handling the negotiations take into account all the transfer fees in addition to the liens IME when negotiating with the lender for an approved short sale.

Yes, you get clear title when you close in a short sale. If there are fees the short sale lender is not paying you will either have to pay those fees at closing or cancel the purchase IME. If you are purchasing with a new mortgage, your new lender isn't going to accept anything other than a clear title.

How long have you been in this contract waiting for approval from the current lender and other lien holders?

I'd be tempted to go down the street to the new construction and get a unit that has a clear title. At least you get a builder's warranty and a clear title. That is worth something. Especially as the HOA board doesn't seem to be doing their job.

I know we rant and rail about HOA boards getting into our business. When they do their jobs, your investment is protected. It will behoove you to get on the HOA board. This way you can see the financials and raise the alarm is something isn't being done properly.

@Denita sorry I think this got sidetracked, not really concerned about the property tax at the moment, nothing has risen regarding that yet. Just focusing on HOA outstanding balance that the seller is negotiating with them and how those often play out (both in terms of timing it takes to settle and how often/what percentage the buyer often contributes). Ive been under contract almost 6 months and everything prior to this HOA issue was resolved 4 1/2 months ago.

@homechef59 I definitely am tempted, sunk cost fallacy states I shouldn't hold up because of all ive been through but here I am haha. I do really like the house, but I am probably going to at least get some more info around the new constructions and what is available. The warranty, reduced home insurance rates (I think first 5-7 years get a reduced rate), all new appliances/flooring/etc. I don't necessarily know if the HOA is causing any issues or if the seller has just been very resistent; since I dont have any background I dont want to make assumptions, but im hopefully the negotiations can get resolution soon. I have actually considered going into a spot there as I work in financial analytics and can quicklg tell when something is wrong upon looking at financials. While that's for down the road, now I mostly want to see just general examples of how long these cases take and if its more common for settlement to be between the HOA and Seller or how often they require buyer assistance (a little suprised they haven't asked me for help, but that may be the way our contract is worded as I think it states the seller is responsible to provide a clear title - not positive though as the jargon gets a little difficult to follow).

Agree with homechef59.
6 months is a long time to negotiate a short sale IME. Some short sales have taken that long but normally it takes less than 6 months unless the lender is preferring to foreclose. There are properties that the lender would rather have in their REO inventory than sell through a short sale. However those properties have a tendency to have lots if equity (where possible) or two mortgages where the second is larger than the first. In both of these types of properties the lender generally prefers to foreclose.
Check out the resales or new construction to see what's available now.

Yes i've seen a little of everything, some take 2-4 months of negotiation/title clearing, some take 2+ years. My issue is that this is a very simple short sale outside of the HOA issue, single mortgage and we came to agreement relatively quickly. Not positive when they began negotiations for HOA delinquency so that could be more recent. I also don't know how the foreclosure protections during COVID have impacted this, I know Maryland is very progressive with providing rental and forclosure protections, so that may inhibit the lenders doing so.

I do know this was an approved short sale, so from the lender's perspective they were fine with it before going on the market, we are all agreed on the buyer-lender end of things. So all I need is them to settle this issue and then provide the official approval letter. This issue is just a valuation decrease causing a loss on the property, not too notable of a loss but largely because they are covering seller closing costs. I'm browsing what I can, will have to discuss with the builders on new constructions, but saw a very nice, slightly larger home selling for about 15% more. Really prefer just to get through this one, but good to have the alternatives in my back pocket if needed.

Who did you quickly come to an agreement with initially? If you are talking about the seller then that is perfunctory and normally takes place within 24 hours IME. (I'm a Realtor that has negotiated a number of short sales along with various attorney's and title co's).

If you are saying that the sellers lender quickly agreed, but the HOA didn't, then that is a different story.

Even on a "pre-approved" short sale, it doesn't mean that the lender will accept the pre-approved price. It depends on the length of time since the pre-approved short sale was approved. If, in fact, the lender has approved your offer and the HOA has not (yet) approved your offer you are still in a holding pattern unless and until you get the HOA approval.

If you haven't received the official written letter from the seller's lender approving your offer, then it's not approved no matter what the agent(s) or attorney indicates to you.

^Agree with homechef plus make sure you have a copy of all of the governing HOA docs (ByLaws, Rules & Regs, articles of incorporation, declaration of incorporation) PLUS copy of current year's HOA budget plus at least last years financial statements. This way you know the line item expenses and income. BTW, this should have been included in your contract.

@denita yes the seller approval was really quick as expected, but the seller's bank which I assumed would take long only took 10 days to come to agreement on price with me and sent the updated contract awaiting the official approval letter (which they said I cant get until this is worked out). Since then I had very little communication until hearing about this HOA concern, now knowing that is allegedly all that is holding it up.

@homechef59 Yes I will reach out to my realtor and potentially the HOA about the status. I do have a friend in the community who mentioned they did an assessment earlier in the year (per their terms only impacts current owners at that time). I deal with a lot of financial decisions within my company and best determinations on higher level write-offs/negotiations when it comes to collections. If I get get a principle, late fees and legal fees breakout it would help me determine it, as I know a balance can easily triple due to the latter two in a very short time frame. For the most part the HOA doesn't do much outside of mowing/street snow removal (all any any exterior home repairs are at the owners cost), there are very basic common areas that are essentially grass with minor plants around them. I can access the bylaws online and have read through those, on a base level it reads as though most things work in my favor and against the seller, but of course it doesn't have a short sale specific notation, so its a bit ambiguous and handled case-by-case. Also it does not mention what the board handles (likely not much) vs the company contracted for admin/collection duties (more likely involved here).

I will certainly be pushing more on the HOA moving forward but may have my friend get the details. I may be a bit paranoid but don't want to be showing desperation in going to the HOA to the point they assume I want it bad enough to dish out serious cash in settling someone else's debt. From what I've read they rarely collect what's owed, ive seen 20k go down to 3K, ive seen 10K settled at 8K. I think they know they risk in foreclosure of only collecting 1,200 potentially so hopefully will work out, just dont know how hard they will push back as im not privy to the conversations. In an ideal world the seller would cover what he can and carry-over the rest, as debt normally goes; sadly these tend to prey on buyers interest and commitment to a home after the fact.

One issue was the seller's lender required a specific Title Company, something fell through and we changed to another Title Company (also required by sellers lender). This new title company seems to have it together more, I believe they got working on the HOA issue more heavily. Unfortunately a lot is guessing and assumptions as the seller's agent is really not communicating much and we are locked out of contact with most others.

If the seller's agent isn't communicating frequently or effectively, I'd start ratcheting up the pressure. Make your agent start making daily to hourly calls to this person to get some answers.

Once again, squeaky wheel. If the seller's agent isn't playing ball, elevate it to their broker. Broker's hate getting these kinds of calls. But, they are necessary when someone isn't doing their job.

I like to get along when possible, too. When my interests, in this case my time and effort, are being ignored I get them unignored. Believe me when I tell you that the seller will appreciate it, too.

Closings around holidays are always hard because someone is always out of town. It takes a lot of pushing to get everyone on the same page.

Yeah that's my consideration, I don't want to seem desperate to the point the HOA assumes I want it bad enough to cover the difference (I dont). I will be in touch with my realtor about escalating the issue and getting the hard numbers available. My issue is slightly on time, as I really don't want this running past January, but the issue is more of just knowing. If I got verification and knew we could close in mid January or mid February, that would be a lot nicer than the ambiguiaty we currently have. I'm sure all parties would like this done with, HOA would love to get back to consistent and timely payments without fear of risk (Maryland is extremely forgiving to those being evicted/foreclosed, and has many barriers preventing that if it came to a forced foreclosure), Seller and his lender moving on with their lives/businessses, and of course I would like to start building equity and have an amazing rate given it's a 15-year fixed during the covid-era interest rates. If I had all the time in the world I would be more patient, as I don't see this market lasting with all of the pending foreclosures and assistance slowly drying up.

Never easy to guess the markets, but my rule has been to go with a good option when I see it and that is my plan. After the holiday I will be reaching out about the new constructions, that while at a higher price point offer a new home, discounted home insurance for several years, all new appliances, nothing that needs to be fixed up, and technically are 3 bed/3.5 bath vs a 2bed/2.5 bath (caveat being the first floor bedroom is an office at best, as would be with this home if it were not an end unit with front door, garage door and stairs all in different ends of the floor). Since the new homes are techinically in a different HOA, that might be an advantageous point, but I do like the current contracted homes location slightly better (about 4 blocks apart but both low crime and white-collar young professionals late 20s to early 40s). Both units are from the same developer but on different ends of the "old" communities from the early 1900s.

Applying pressure to get a firm answer doesn't indicate that you are willing to rollover and agree to anything the HOA may propose. Applying pressure indicates that you want an answer. Don't be afraid to apply the pressure. Your time and effort are worth something and you are being disrespected by not receiving an answer in a reasonable amount of time. You have been more than patient. Go down to the new construction during the long weekend and check it out further.

Thanks, appreciate it. Yeah fortunately the area of the new construction and current house under contract are just a few blocks apart and the same developer. I will definitely see what they have available as it might even be a better deal if there is no issue with HOA or other possible liens. If I can get all of the details it should help me make a better decision on it, and it appears that these new constructions are a pretty fast sale from completion to sale.