Selling a Texas Condo — FHA-Delisted, Special Assessment, or HOA Issues

Yes, severely. FHA project approval is a status the entire condo project carries, not the individual unit, and once a project loses approval, FHA loans cannot be used to purchase any unit in that building. The same logic applies to VA loans, which use a similar but separate approval process. Since FHA and VA loans together make up a meaningful share of first-time and lower-down-payment buyers in Texas — particularly in Houston and Dallas urban condo markets — losing approval shrinks your buyer pool dramatically. The buyers who can still close are conventional borrowers (Fannie Mae and Freddie Mac approve condo loans on a case-by-case "limited review" or "full review" basis), portfolio lenders, and cash buyers. On older Texas condo buildings — many DFW and Houston condo projects built in the 1970s and 1980s lost FHA approval over the past decade and never re-applied — the cash-buyer share of the buyer pool can be 50 percent or more. That is why FHA-delisted condos in Texas often sell at meaningful discounts to comparable approved-project units, and why those sellers end up calling us.

The Texas Condominium Act is codified at Texas Property Code Chapter 82 and governs the operation, governance, and resale of condominiums created after January 1, 1994. (Older condos may be governed by the predecessor Texas Condominium Act in Property Code Chapter 81 — most operate similarly in practice.) The most relevant provisions for a seller are the disclosure and resale-certificate requirements. Texas Property Code section 82.157 requires the condominium association to deliver a resale certificate to the buyer prior to closing, containing the current assessment, any past-due amounts, any pending or proposed special assessments, the budget, the reserve fund status, the most recent annual financial statement, and any pending lawsuits affecting the association. The seller is also required to disclose any known material facts. The resale certificate has a defined turnaround under the statute and the association can charge a fee for issuing it. On a condo with HOA issues, the resale certificate is where those issues become public to the buyer, and where retail deals start to fall apart.

A pending special assessment is one of the most common reasons we see condo deals collapse on the open market. Special assessments are HOA charges levied on unit owners outside the normal monthly dues, usually to fund a major repair (roof replacement, parking garage waterproofing, exterior recladding) or to address a reserve shortfall. Under Texas Property Code Chapter 82, any pending or proposed special assessment must be disclosed in the resale certificate, and the buyer's knowledge of that liability changes the math materially. A $15,000 special assessment on a $200,000 condo is a 7.5 percent immediate hit on the buyer's cost basis; on a higher-rise tower with major facade work pending, the assessments can run $30,000 to $100,000+ per unit. Retail buyers regularly walk during the option period once the special assessment shows up in the disclosure, and lenders may refuse to fund the loan until the assessment is paid or the work is bonded. We buy condos with pending special assessments routinely — the assessment is a line item in our offer math, not a deal-killer. The economics of who pays the assessment at closing depend on the contract and the timing; we walk through that with you at the offer stage.

The resale certificate (sometimes called a subdivision information form for HOA neighborhoods, but for condos it is the condo resale certificate specifically) is the document the association issues to the buyer summarizing the financial and legal status of the project and the unit. It is required by Texas Property Code section 82.157 on condo sales, and the association has a defined turnaround window — generally up to 30 days after the request, sometimes faster under the association's own bylaws. The certificate includes current assessments, past-due amounts, special assessments pending, reserves, budget, financial statements, and litigation. The fee the association can charge is capped under the statute, but in practice it ranges from $100 to $400 depending on the project. On a sale to us, we order the resale certificate as part of diligence and pay the fee out of closing — you do not need to coordinate with the HOA yourself or front the cost. The certificate timeline can affect closing date: a project with a slow management company can add two to four weeks to the calendar.

Not necessarily, but it adds a step. Right of first refusal (ROFR) clauses in condo declarations give the association — or in some buildings, the other unit owners — the right to match a third-party purchase offer before the sale can close. Some Texas condo buildings (more common in older Dallas, Houston, and Austin towers) carry ROFR provisions; many do not. The standard procedure: once you have a signed purchase contract with us, the association is notified, and the ROFR period (often 30 days, varies by declaration) begins. If the association declines or fails to exercise, the sale closes as scheduled. If the association exercises, they step into the buyer's position at the same price. We have closed deals on both paths — the ROFR is a procedural step, not a real obstacle for sellers in most cases. The declaration document for your project will tell you whether your building has one and what the exercise procedure is.

Yes. Reserve shortfalls and HOA litigation are two of the most common reasons retail buyers walk on condo deals, and they are categories we underwrite regularly. A reserve shortfall means the HOA has not collected or saved enough to fund anticipated major repairs — eventually that becomes a special assessment to unit owners, and the buyer's lender often refuses the loan once the reserve study shows the gap. Pending litigation against the HOA — common in post-Harvey Houston buildings still fighting insurance claims, in towers with construction defect claims, or in associations sued by former vendors — also kills lender approvals and scares retail buyers. We read the audited financials, the reserve study, and any litigation pleadings as part of our diligence. The condition affects the offer math; it does not stop the deal. Send what you have during the call and we factor it in.

Yes. Houston-area condo buildings affected by Hurricane Harvey in 2017 are a specific category we still see active calls on — many buildings spent years in insurance disputes with carriers over coverage limits, business interruption, flood vs. wind allocation, and unit interior coverage, and some of those disputes are still working through litigation or settlement. The downstream effect on individual unit owners is some combination of: special assessments to fund repairs that insurance did not cover, building reserves depleted, lender refusals because the building has open litigation, and reduced unit values across the project. We can underwrite a condo in a building still in insurance litigation; the offer reflects the open exposure, and we close even when most retail buyers cannot. The same logic applies to non-Harvey insurance situations — wind events, fire damage to a tower, or structural issues that turned into multi-year claims.

Yes. High-rise tower condos (Museum Tower, The W Residences, Bleu Ciel, The Tower Residences, etc. in downtown Dallas; The Houstonian, The Royalton at River Oaks, The Huntingdon in Houston; The Austonian, the W Hotel Residences in Austin) operate under the same Texas Condominium Act framework as garden-style suburban condos — the resale certificate, the special assessment disclosure, the right of first refusal mechanics, the FHA approval logic all apply identically. What is different on tower condos is the dollar scale: special assessments on a 40-story building running through a multi-year facade or mechanical project can be six-figure per-unit, the HOA dues are typically higher (concierge, valet, amenities), and the resale market is thinner because the buyer pool for $700,000+ condos is smaller than for $150,000 condos. We buy tower condos on a case-by-case basis. The diligence is heavier but the framework is the same.