Does ‘Cloud’ on a title have a financial impact?

Background we bought a condo for my elderly parents, my mom has severe
allergies which we got a doctors note for, and we applied to keep a laminate
floor that was installed by the previous owners flippers without permission
from HOA. We are on the ground floor, and CCR prohibits hard floors for
noise issues. The main reasons we bought this condo is one because of
laminate floors as my moms allergies are made worse by carpet, and the
ground floor as my mom also has server arthritis. We submitted a reasonable
accommodation request to the HOA. They gave us an approval for hardship,
and required the hard wood floor be taken out when we sale the property.
They will put this on our resale certificate, which is ok with us, but also will
be putting a ‘cloud’ on our title. Does this ‘Cloud’ on a title have an effect if
we want to take out a home equity loan? Or any other advice you have will be
great.

Asked on March 31, 2017 under Real Estate Law, Washington

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

It will affect it to the extent that this is an obligation you'd have to meet to sell the unit, which means the cost of it potentially impacts your ability to sell and what equity you'd realize. For example: if it would cost $10k to do this, you will realize $10k less from the sale than if you did not have this obligation; a lender should therefore approve you for somewhat less of a loan/line, given that there's extra costs associated with the sale, reducing equity, and also that it's one more "step" or complication to be dealt with before the unit could be sold.


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