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#2300096 - 08/05/24 11:29 PM Closing Disclosure: Future Special Assessment
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,462
California
TRID Question re: Closing Disclosure
We have a purchase transaction where the Purchase Contract indicates a $5,600 future assessment from the HOA and the Seller is going to pay it - give a seller credit. The catch is that (I guess) a ballot is being sent out to all of the unit owners on whether or not to approve this special assessment. The HOA expects that it will pass, but the vote isn't for 2 weeks which will be after our loan closes. Escrow (our loans close through escrow) is giving the seller credit as part of escrow even though the vote has not taken place. For our closing disclosure, I see some options. Since this is a future fee (unknown but pretty sure it will be assessed), we leave assessment (and the seller credit) off our CD entirely. OR, we disclose the special assessment in Section H (Other) with it showing as paid in the Seller Paid Before Closing column. (If it is voted down, the seller and buyer can work that out.) Or, we allow the Seller Credit as a General Seller Credit in Section L which will reduce the Cash to Close. Then if the assessment is passed, the Buyer then pays out of pocket since he has received the credit already. We're thinking about going with the last option so that the Cash to Close amount is more accurate. Any thoughts on that?

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Lending Compliance
#2300098 - 08/06/24 11:27 AM Re: Closing Disclosure: Future Special Assessment Tarhe
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 85,015
Galveston, TX
If this is closing through Escrow, would your Escrow agent hold the funds for payment of the assessment or return the funds to the seller if the assessment vote fails? Sounds more like an adjustment on the seller side in Section N to me which the escrow agent would hold until it was determined if it will be paid or returned to the seller. This is assuming that the contract calls for the money to go back to the seller if the assessment fails.

If that is not the case, then I think it would just be a general seller credit as there is no specific third party to pay at this time.

I assume this is not a requirement of the bank for this assessment to be paid at closing to close the loan since you do not even know whether it will happen or not and that this is a side agreement only involving the borrower and seller and not the lender.
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#2300122 - 08/06/24 03:05 PM Re: Closing Disclosure: Future Special Assessment Tarhe
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,462
California
Thank you very much for the help!

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