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The Closing Was Supposed to Be Friday. Then the HOA Got Involved.
Everything Was On Track Until The Last Week
One of the most frustrating transactions I’ve experienced in nearly 24 years of real estate happened recently during what should have been a routine closing.
The buyers were excited.
The sellers were packed.
The financing had been approved.
The closing date was set.
Everyone expected to sign on Friday.
Then the HOA got involved.
Actually, to be more accurate, the lender’s review of the HOA documents got involved.
What followed was a week-long delay that caught everyone by surprise.
In almost 24 years of selling real estate, this was the first transaction I’ve personally experienced where a closing was delayed solely because of an underwriter’s review of HOA documentation.
The Problem Wasn’t The HOA
This is important.
The HOA wasn’t necessarily doing anything wrong.
The issue was that additional questions started surfacing late in the process.
The loan file had already gone through underwriting. Then it was reviewed again by a more senior underwriter who started asking detailed questions about the association.
Some of the questions involved information found in the meeting minutes.
Others involved a small commercial use component associated with part of the parking structure.
The questions themselves weren’t necessarily major issues.
The challenge was gathering answers.
Every answer seemed to create another question.
Some responses came quickly.
Others took longer.
Some information was incomplete.
As the clock continued ticking toward closing day, the frustration started building.
The Emotional Side Nobody Talks About
What many people don’t realize is that a delayed closing affects everyone.
The buyers were upset.
The sellers were upset.
Everyone had made plans around a specific closing date.
Fortunately, neither side absolutely had to move that day.
However, my buyers were getting dangerously close to being without a place to live within a matter of days.
That creates stress.
It creates uncertainty.
And when people are stressed, emotions run high.
The difficult part was that there wasn’t a magic solution.
The lender already had people working on the file.
The HOA was responding.
Everyone was trying to do their job.
The reality was that this had become an information-gathering exercise that simply required time.
What I Learned From The Lender After Closing
After the transaction finally closed, the person handling the file reached out to me and explained what happened.
Her explanation was eye opening.
She explained that condo and HOA approvals can be significantly more involved than a typical single-family home purchase because lenders often conduct a separate review of the association itself.
That review may include:
• Budgets and reserve accounts
• Insurance coverage
• Special assessments
• Litigation history
• Delinquency rates
• Meeting minutes
• Governing documents
The file may also go through multiple levels of review.
That means questions can arise later in the process, especially when documentation arrives late or additional clarification is needed.
The lender also acknowledged that communication could have been better earlier in the transaction.
That honesty was appreciated.
Most Buyers Have No Idea This Is Happening
When most people buy into an HOA, they think about things like:
• Pet restrictions
• Parking rules
• Monthly dues
• Exterior maintenance
What they don’t realize is that lenders may be reviewing an entirely different set of documents behind the scenes.
The lender is trying to determine whether the association itself is financially stable and whether anything exists that could create future risk.
That’s a much deeper review than most buyers ever expect.
The Biggest Lesson I Took Away
This experience changed the way I will handle HOA transactions moving forward.
In the past, lenders typically focused heavily on the resale disclosure certificate and basic HOA information.
Going forward, I will be encouraging buyers, sellers and lenders to gather as much HOA documentation as possible as early as possible.
The earlier questions surface, the easier they are to solve.
Waiting until the final week before closing creates unnecessary pressure on everyone involved.
Who You Hire Matters
One of the biggest takeaways from this transaction has nothing to do with the HOA itself.
It has to do with the professionals involved.
The right real estate agent matters.
The right lender matters.
Experience matters.
Communication matters.
No transaction is perfect.
Problems happen.
What matters is having professionals who can identify issues early, communicate clearly and keep everyone moving toward the finish line.
This transaction eventually closed successfully.
The buyers got their home.
The sellers completed their move.
But the process taught me valuable lessons that will help future clients avoid similar delays.
Final Thoughts
The closing was supposed to happen on Friday.
Instead, it happened a week later.
While that may not sound like a major delay, it felt like an eternity to everyone involved.
The biggest lesson is simple.
HOA transactions have become more complex.
Lenders are asking more questions.
And preparation matters more than ever.
If you’re buying a condo, townhome or any property with an HOA, make sure you have professionals helping you gather information early and navigate the process from the very beginning.
Sometimes the biggest obstacles are not the problems themselves.
They’re the questions nobody knew were coming.
Thinking about buying or selling a townhome, condo or HOA property in Lakeville, Bloomington or anywhere in the Twin Cities?
Call or Text Tom Sommers directly at 952-994-7204 and let’s put together a plan that helps avoid surprises before they happen.
