Q&A: Mortgage Money Mess


Q. I am trying to purchase a condominium in Western Florida, but it seems that the board is dragging its feet and holding up the process based on my financial status. I don't know what the problem is because I have an excellent credit history and no lawsuits against me. I will even have enough money in the bank to pay the mortgage and maintenance fees for over a year. Yet the board still believes that my credit is not good enough and desires a co-applicant on the mortgage application. Do I have any kind of rights in this situation? Is there such a thing as financial discrimination? What recourse if any do I have?
                 —Peeved in Port Charlotte

A. “The answer to your question may be based in part on the wording of the restrictive covenant setting forth the association resale approval process,” says attorney Jay Steven Levine, founder and sole shareholder of the Boca Raton-based Levine Law Group, with offices in Palm Beach Gardens and Melbourne.
“Based on the typical set of restrictive covenants in Florida, associations are given the right of approval or disapproval over an application to purchase. If the association has “good cause” to reject an application, then under this typical declaration, the association may disapprove and the transaction may not proceed forward. If instead the association does not have the “good cause” to reject the application, then under the typical declaration in Florida, the association would have to provide a substitute purchaser or accept the original purchaser and allow the closing to occur.
“There are not many reported court and arbitration cases in Florida which have addressed the issue of the association's good cause to reject a purchase application. The principal reason to disapprove is there the proposed purchaser cannot comply with the valid restrictive covenants in the declaration or rules and regulations. Under these circumstances, not only does the association have the right, but it also has the duty, to reject.
“Although there is not Florida court or arbitration case on point, most attorneys practicing community association law agree that certain criminal history would be a basis for denial of the application. For instance, if the applicant is a registered sex offender, most attorneys agree that the association would have a valid reason to disapprove.
“The more difficult issue is the one which you have presented, namely financial reasons. To the extent that the purchaser will be taking out a mortgage with a conventional lender (such as a bank) who will review the credit worthiness of the purchaser and determine whether the purchaser is able to pay the mortgage payments along with insurance, real estate taxes and assessments. In the event of such a conventional lender review, it is my opinion that the association does not have good grounds for rejection. If, instead, the purchaser is taking out a mortgage with a non-conventional lender, such as a credit union or seller financing, the purchaser's ability to pay has not been judged by a lender with strict lending criteria, and therefore, the association has an argument that it may reject.
“Based on the foregoing, there is not any “per se” protection against financial discrimination. However, to the extent that the association is attempting to exclude a purchaser based on credit score and other economic criteria and the purchaser falls within a protected class of persons (such as race, national origin, religion and familial status), the disapproved applicant could have a viable claim for housing discrimination against the association. The Fair Housing Discrimination Laws are found at the national level and also in many states, such as Florida, and in many counties within Florida (such as Palm Beach or Pinellas County). If a purchaser believes that he/she is within a protected class of persons and believes that the application was denied due to discrimination, then the purchaser is well advised to consider the filing of a complaint within the U.S. Department of Housing and Urban Development, and any states which have housing discrimination laws.”   

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