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How To Buy a Unit in a Nonconforming Building

Richard Montgomery on

Dear Monty: I'm looking at a town house that is a single two-bedroom, one-bath unit among five other individual parceled properties. The town house is uniformly attached to the different units and shares a paved back parking lot. The unit's interior is well-maintained; however, the exterior looks rough. There is peeling paint, the small front decks on each unit are rotting and the age and condition of the flat asphalt roof that spans all units is unknown.

I've been told that a homeowners association previously ran it, but it disbanded in the 2010s. Right now, two units are owned by local folks, while the other four are owned by two separate nondescript limited liability companies. I talked directly with the owner of the unit, and they swear that it's a great place to live. However, they need help selling because having no HOA is a can of worms waiting to be opened. It truly is an excellent location and the unit itself will fit my needs. I'm looking to have this be my main residence. Would you buy a property like this?

Monty's Answer: There may be an intelligent path to ownership. Consider following these steps to decide.

1. Contact a local title company and buy a title search. The original HOA may still be intact, but the owners do not realize it. Either way, the original HOA documents may have been recorded. The title company may also be able to determine how to contact the other unit owners. You will learn a lot early: dates and prices of earlier sales, potentially a survey and more. This title search may cost $75 to $125, or you can try to figure it out yourself. The folks in the register of deeds office may provide some guidance if you choose that option.

2. Unless you are paying cash for the unit, you should visit a mortgage lender to learn if the Department of Housing and Urban Development rules allow a lender to finance a unit in the building. Many lenders will avoid this unit if it is financeable and there is no HOA.

3. Assuming you get through the pre-offer work, you make an offer subject to creating a new HOA or reviving the former one. There is still more due diligence to be done, so other conditions should be in the offer, such as a property inspection (of not just your unit, but the condition of the entire project) and a written commitment by all the other unit owners to participate in the HOA. Another critical component is locating the property boundaries or surveying if the property survey cannot be found. Additionally, you should tour the other five units. If the owners of these units live in them, you will learn even more. It is a chance to educate them on why they should support an HOA.

Give yourself enough time in your offer to accomplish these tasks. If you need a mortgage and your lender is interested in the loan, you also need a financing contingency.


You have several options when you reach the deadline for removing your contingencies. You can:

-- Walk away with a minimal investment in time and capital.

-- Eliminate the contingencies and close.

-- Negotiate an extension if you underestimated the time necessary to complete your due diligence.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur, and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter (X) @dearmonty or DearMonty.com.


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