What is fair?
When a property is part of a mandatory homeowners association, a violation of the HOA rules, regulations, or restrictions does
not usually hinder a sale. And the seller is not automatically obligated to
resolve the violation.
After closing, the new buyer may get a letter from the HOA
stating that they are out of compliance and must fix the issue. That kind of
surprise shouldn’t happen, but certainly does sometimes.
Know your rights
When there is a mandatory owners association (HOA), the
standard TREC contract has a provision for providing HOA documents and for the
buyer to object to any issues. The buyer is entitled to receive copies of all
documents that govern the maintenance or operation of a property including
restrictions, bylaws, rules and regulations, and a resale certificate.
HOA documents are essentially restrictions to the owner’s
use of their property. These can include a variety of matters: how many and
what kind of pets are allowed, signs or flags being displayed, parking of
vehicles, guests allowed, cable or internet services available, front door
color, fence design, roof materials, etc. What is fine with one new homeowner
may be completely unacceptable to another.
The Resale Certificate discloses the amount
and frequency of dues and assessments, any lawsuits they are involved with, and
other information. A current resale certificate is required from the HOA to
state if they are aware of any current violations to their rules and
restrictions.
The HOA disclosure on the resale certificate gives the buyer
notice of any violations prior to closing.
As stated in the contract, after receiving the HOA documents
and resale certificate, the buyer has three days to terminate the contract if
they don’t like what the resale certificate or other documents reveal.
Or the buyer could address any issues with the seller within
that three-day period and come to an agreement. The buyer and seller could
amend the contract to require the seller to fix a violation.
In the case of our new homeowner, they did not take notice
of the violation disclosed by the HOA or the fence restrictions. And they did
not object to the HOA documents in the three-day period. The seller claimed to
have no previous HOA notice of the violation and therefore had no obligation to
disclose an unknown issue.
Know your responsibilities
When it comes to HOA documents, the buyer must be proactive.
It is the buyer’s responsibility to review the HOA rules, restrictions,
requirements, and resale certificate prior to purchase. The three-day period
for objections is important. HOA documents can total more than 100 pages.
That’s a lot of reading to do in less than three days.
If the HOA has a website, they are required by law to post
their restrictions on their site. If you’re considering the purchase of
a property with a mandatory owners association, why not go to their website and
review the rules, regulations and restrictions prior to executing a contract?
The buyer has a duty to ask questions and resolve any HOA
item they have an issue with. This should happen as soon as they receive HOA
documents. The three-day period is their opportunity to request that the seller
fix any violations. If they fail to do so, then along with buying the property,
they are buying the problem that comes with it.
A buyer of a property with a mandatory HOA is obligated to
pay assessments and to follow the restrictive covenants governing the use,
maintenance, and occupancy of the property and community. They need to take the
time to understand their HOA commitment.
Buyers have the right and responsibility to make an informed
decision on their purchase.
The opinions expressed are of the individual author for
informational purposes only and not for legal advice. Contact an attorney for
any particular issue or problem.
No comments:
Post a Comment