FHA approval requirements, HOA super-priority liens, right of first refusal, and special assessments can make condo sales more complicated than single-family — but a cash buyer sidesteps most of these obstacles.
Rhode Island condo sales are governed by the Rhode Island Condominium Act (RI Gen. Laws § 34-36.1). The Act establishes what must be disclosed, how common elements are managed, and critically — the HOA's super-priority lien rights. Every condo sale in Rhode Island operates within this framework, and understanding it tells you which obstacles you'll face when selling to a financed buyer vs. a cash buyer.
Under § 34-36.1-3.1, a condominium association has a super-priority lien for up to 6 months of unpaid common assessments. This lien takes priority over a first mortgage — meaning even if the first mortgage lender forecloses, the HOA can collect 6 months of dues first.
For a seller, this matters because: any unpaid HOA dues must be paid at closing before your proceeds are released. The title company collects a payoff letter from the HOA showing the exact amount owed (including any late fees). If you're significantly behind on dues, that balance comes out of your check at closing.
FHA loan buyers can only purchase in FHA-approved condominium buildings — or units that qualify for FHA spot approval. Many Rhode Island condo buildings are NOT on the HUD approved list. To qualify, a building must generally meet:
If your building doesn't qualify, you lose every FHA buyer — a significant portion of first-time buyers. A cash buyer has no FHA restriction and can close regardless of building approval status.
| Issue | Impact | Financed Buyer | Cash Buyer |
|---|---|---|---|
| FHA non-approval | Blocks FHA loan buyers | Building must be on HUD approved list or get spot approval (≥10% down, owner-occupancy ≥50%, <15% dues delinquency) | No impact — cash buyers have no FHA restrictions |
| HOA right of first refusal | Can delay closing by 10–30 days | Lender may require ROFR waiver before funding | Same — ROFR still applies, but no lender complication on top of it |
| Pending special assessment | Reduces net proceeds; lender may require payoff | Lender may refuse to fund if assessment is large and reserve fund is low | Cash buyer factors into offer; no lender refusal |
| Low owner-occupancy ratio | Blocks Fannie/Freddie approval if <50% owner-occupied | Conventional loan approval denied; investor-heavy buildings are difficult to finance | No impact |
| Pending litigation | Most lenders refuse to fund | Any pending lawsuit (construction defect, personal injury) can kill financing | Cash buyers evaluate case-by-case; often still proceed |
| HOA dues delinquency | Lender concern; may flag reserve adequacy | Fannie/Freddie require <15% units delinquent 60+ days | No lender restriction |
Some Rhode Island condo associations include a right of first refusal (ROFR) in their master deed or declaration of condominium. A ROFR gives the HOA or other unit owners the right to purchase your unit at the same price and terms as any outside buyer — within a defined window (often 10–30 days).
If your master deed includes a ROFR: you must provide written notice to the association when you have a signed purchase and sale agreement. The HOA then has its window to either exercise the right or deliver a written waiver. Most associations waive it — but the timing must be built into your closing schedule.
Pull your master deed (recorded at the RI Registry of Deeds) and look for language around "right of first refusal," "right of first offer," or "preemptive right." Your real estate attorney can verify.
If your HOA has voted on but not yet fully collected a special assessment (a one-time charge for a capital project like roof replacement, elevator repair, or parking lot repaving), you must disclose it to buyers. Under § 34-36.1, the seller must provide resale disclosures including any pending assessments.
A large pending assessment can threaten financed deals — lenders may require the seller to pay it off at closing, reducing your net proceeds significantly. Cash buyers typically still proceed; they factor the assessment into their offer calculation.
No FHA restrictions. No condo questionnaire. No HOA approval delays. Cash offer in 24 hours, close in 7 days.
Call (401) 396-7427Get Cash Offer →Yes — to a conventional loan buyer or a cash buyer. FHA restrictions only apply to FHA loan buyers. If your building isn't FHA approved, you lose that buyer segment, but conventional and cash buyers remain available.
Check your master deed and declaration of condominium. If a ROFR is present, you must notify the association when you sign a purchase agreement and allow their waiver period (typically 10–30 days) before closing.
A condo questionnaire is completed by your HOA/management company and submitted to the buyer's lender. It's required for any financed purchase. Cash buyers don't need one.
You must disclose it. Lenders may require seller payoff at closing. Cash buyers factor it into their offer and aren't restricted by a lender's assessment threshold.