SusanS9 (California)
Posts: 56
Posts: 56
Posted:
Is an HOA obligated to disclose to homeowners lawsuits against the association? And in turn, are homeowners obligated to disclose the lawsuit to buyers when they sell their homes?
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Disclosure of Lawsuit
Started by SusanS9 • 6 replies • 2791 views
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SusanW1 (Michigan)
Posts: 5,202
Posts: 5,202
Posted:
1. Yes, the HOA should let homeowners know what's going on - and if that includes a lawsuit, so be it. More importantly, what the the costs and outcome was.
2. A smart realtor will insist on knowledge of any ongoing lawsuits against the HOA, plus copies of all the governing documents, plus the most recent finanical statement, (including a reserve fund study) to give to his/her buyer.
2. A smart realtor will insist on knowledge of any ongoing lawsuits against the HOA, plus copies of all the governing documents, plus the most recent finanical statement, (including a reserve fund study) to give to his/her buyer.
DonnaS (Tennessee)
Posts: 5,671
Posts: 5,671
Posted:
Susan,
Many States have Truth Disclosures that a seller must sign when they list the property. On those forms, there are questions that must be answered and one of them is about any lawsuits against the HOA. There is also a section asking about any lawsuits against the property. So the answer is probably yes, especially in California. Call a good real estste agent and ask.
RichardP13 (California)
Posts: 1,767
Posts: 1,767
Posted:
SusanW
You might want to look at Section 1368 (Disclosure Requirements of Seller) of California Civil Code, better known as the Davis Stirling Act. In addition, there may be restrictions on whether a government agency will lend in a community where there might be an outstanding lawsuit against the Association itself.
You might want to look at Section 1368 (Disclosure Requirements of Seller) of California Civil Code, better known as the Davis Stirling Act. In addition, there may be restrictions on whether a government agency will lend in a community where there might be an outstanding lawsuit against the Association itself.
TimB4 (Tennessee)
Posts: 21,060
Posts: 21,060
Posted:
Susan,
The questionnaires from lenders, that have started due to changes in FHA guidelines, my Association has received (which the association completes) have all asked if the Association is involved in any litigation. The Association may chose not to answer but may not lie on the the questionnaire (otherwise the individual signing the document and the Association itself would have committed fraud and be subject to legal action).
The questionnaires from lenders, that have started due to changes in FHA guidelines, my Association has received (which the association completes) have all asked if the Association is involved in any litigation. The Association may chose not to answer but may not lie on the the questionnaire (otherwise the individual signing the document and the Association itself would have committed fraud and be subject to legal action).
NameW (Virginia)
Posts: 74
Posts: 74
Posted:
Since the reserves, the Common Areas and just about everything else are potentially at risk when the HA is sued, I am at a loss to come up with a situation in which an HA's Board would even want to try to conceal the existence of the suit against the HA. Attempting such would certainly provide those opposed to this or that Board member plenty of ammunition if/when they learned of it somehow (i.e., public courthouse record search online, newspaper article, friend who works in the courthouse, and on and on).
RyanD1 (California)
Posts: 38
Posts: 38
Posted:
In addition, you are required to disclose lawsuits to potential owners when they are in escrow. Most escrow documents have a question that ask "Is the HOA involved in any lawsuits or pending litigation?".
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