What if the condo requires major repairs or has evacuation orders?
Major repairs or evacuation orders are deal-stoppers or serious blockers. A condo project with major structural defects, required critical repairs, or active evacuation orders is effectively unfinanceable or requires special underwriting and lender approval. The file will require full review and lender will need clear documentation of the issue, timeline, and cost allocation.
Why it's not always simple
The severity matters: minor deferred maintenance is different from critical structural defect. Additionally, the timeline and cost-allocation questions are complex — will repairs happen before occupancy? Who pays? Will the HOA fund it through assessments or special collections?
If repairs are ongoing but not preventing occupancy, lenders might still fund but with conditions. If the property is uninhabitable, the deal is blocked.
What people usually miss
People often don't ask about major repairs or safety issues upfront. What usually gets missed:
- The HOA questionnaire might not clearly disclose major repairs needed
- Structural defects or safety issues might surface in appraisals or inspections, not in HOA documents
- Major repairs drive special assessments, which affect borrower payment capacity
- Repairs that are "planned" might never actually happen, creating long-term uncertainty
- Not asking specifically about evacuation orders, structural issues, or code compliance
- Missing that major repairs are a red flag for larger underlying problems
The real problem: major repairs are often discovered late (during appraisal or inspection), which derails the file.
Example
A loan officer is processing a file that seems straightforward until the appraiser's report comes back mentioning the building has known foundation issues that require repair. The property manager's questionnaire didn't mention this. Now the file is flagged, the lender needs documentation of the foundation issue, timeline for repair, cost estimate, and funding plan. The file stalls for investigation and the deal might be blocked or heavily conditioned.
If this is a real file
Major repairs or safety issues are serious matters that need to be identified and disclosed early. They're not always deal-killers, but they significantly complicate underwriting.
If you want to understand whether your condo project has major repair or safety issues and what that means for the file, you can run a 60-second pre-screen.