VA HOA Disclosure Inspection

Started by MikeS1 • 19 replies • 3088 views

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MikeS1
Posts: 521

Posted:

Whenever a home is sold in VA, as part of the HOA Docs (Disclosure) that is provided to the purchaser; our P.M. inspects the property and notes any maintenance items or any unapproved architectual changes on the inspection report. Of course, the buyer never reads these and throws them under the bed, but my question is this...

Feel free to chime in on this Tim(VA) - Our P.M. has missed very significant items (like unapproved paint colors that are not even close to our color scheme). IF the P.M misses an item on the inspection and the home is sold with the undisclosed violation, can the HOA still come back and cite the new owner for this condition? or are we forces to grandfather this?

LarryB13 (Arizona)
Posts: 4,099

Posted:

When a person purchases property subject to restrictions, the recorded declaration is the buyer's notice. It is up to him to ensure that the property complies with the recorded restrictions. The declaration and not the PM's inspection report is what counts.

One problem that I see from this forum is that the CC&R's may create an architectural review committee (ARC) and allow the ARC to decide what is and is not allowed. If the ARC's rules are not recorded, then the buyer has no notice of what those rules are. Enforcing unrecorded property restrictions on a new buyer could be messy. The courts have held that vague covenants are not enforceable and nothing is more vague than unrecorded rules.

My suggestion, though, is to inform the new owner of any known violations and request him to correct them. I would cut a new owner a lot of slack and give him maybe 6 months to bring the property into compliance.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Mike

I do not know what your association can/has to do prior to a sale (unless right of first refusal) but I belive once the sale is made you would be on very, very thin ice asking/demanding anything from the new buyer.

MikeS1
Posts: 521

Posted:

IN Virgnia, we have a law called the Virginia Prooerty Association Aact which covers the process by whiich the HOA Docs are handled. It sounds like the laws in AZ are much different than Virginia. The HOA dos or CCRs, bylaws etc are in fact recordsed instruments in Virginia.

The PM will do a physical inspection of the exterior of the property at the time that the seller will request a copy of the HOA docs. My question is really geared towards what happens if the PM misses an architectual items in the inspection. Do we still have recourse against the new owner? .or are we stuck with a grandfathered item?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By MikeS1 on 08/02/2012 10:47 AM

IF the P.M misses an item on the inspection and the home is sold with the undisclosed violation, can the HOA still come back and cite the new owner for this condition? or are we forces to grandfather this?

The Association is bound by the information contained in the package based up to the date of issue.

Therefore, if the Association inspection failed to identify that the house was not painted the proper color, once the sale has closed, the Association may not go after the new owner claiming the house needs to be repainted. However, if the property hasn't closed and the Association discovers the mistake, they can provide a corrected statement.

Per VA 55-509.7 or VA 55-509.6 (whichever is applicable - the language is the same - item G under 55-509.7 and item K under 55-509.6)[emphasis added]

When a disclosure packet has been delivered as required by 55-509.5, the association shall, as to the purchaser, be bound by the statements set forth therein as to the status of the assessment account and the status of the lot with respect to any violation of the declaration, bylaws, rules and regulations, architectural guidelines and articles of incorporation, if any, of the association as of the date of the statement unless the purchaser had actual knowledge that the contents of the disclosure packet were in error.

Bottom line - Disclosure Packages need to be accurate and complete or the Association will be opening issues that could have been avoided.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Mike,

That section of the law is what I actually used to brow beat a board that had issues with the Storm door that was on my house when I purchased. This issue resulted in:

1) 3 years of a newsletter written by me to inform the membership of the various issues with the Association.
2) Threat of legal actions
3) The resignation of the paid Architectural Chair
4) Membership volunteers allowing the restaffing of the ACC
5) Rewriting the guidelines and procedures for the ACC
6) Members of the Board (some who had been on the board for 18+ years)refusing to renew their term
7) My election to the Board
8) Multiple other changes based on knowledge gained from this site and reading/understanding VA laws.

Gee - had the past board never questioned the style of my Storm Door I would have remained a blissfully unaware member of the Association and they could have continued as they were doing.

MikeS1
Posts: 521

Posted:

Tim - As always.. You're a tremendous help! Thanks again.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By MikeS1 on 08/02/2012 12:42 PM
IN Virgnia, we have a law called the Virginia Prooerty Association Aact which covers the process by whiich the HOA Docs are handled. It sounds like the laws in AZ are much different than Virginia. The HOA dos or CCRs, bylaws etc are in fact recordsed instruments in Virginia.

The PM will do a physical inspection of the exterior of the property at the time that the seller will request a copy of the HOA docs. My question is really geared towards what happens if the PM misses an architectual items in the inspection. Do we still have recourse against the new owner? .or are we stuck with a grandfathered item?

Mike,

You are right. Things are done much differently in Virginia than in Arizona.

This raises a question: If your CC&R's prohibit, for example, a storage shed in the backyard and the seller installed a shed that the PM failed to see, what happens? From my reading in most places the restriction against the shed in the CC&R's would prohibit the shed regardless of who installed it or when. If I am understanding this correctly, in Virginia each time a property is sold the restrictions on that particular property may change depending on whether the PM discovered a violation prior to sale. After 50 years or so, you may have entirely different restrictions on each home in the development.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Larry,

The Association is bound by the disclosure statement.However, individual members are not bound by the statement. Therefore, if an individual member wanted to enforce the CC&Rs, the member then have the right to take the property owner to court (neighbor vs neighbor).

I have never seen a court case in VA where this has happened (probably because most owners won't bother). Therefore this statute hasn't been tested in the situation you described. However, based on my personal experience (and now having access to the legal opinion the Association sought confirming the legal opinion I had received) that law would cause the Association to have lost it's right to enforce the issue with the new owner.

Note: It's also unclear (and untested) if the Association is only prohibited from going after the new owner but allowed to list it as a violation on the next disclosure statement when that owner sells.

An argument can be made either way.

MikeS1
Posts: 521

Posted:

Tim - This is comming up again and I can't remember how this scenario affects the second new owner after the home is sold again.

IE - As of today, PM inspects the property and misses the unapproved paint trim colors. the new owner moves in 2 weeks latter. It's my understanding that the HOA is more or less stuck at this point, and cannot make the owner repaint since it wasn't listed on the disclosure. However, 5 years from now when the owner sells and they request another HOA packet with inspection, can they note the violation at that time? Is the the unapproved color grandfathered in perpetuity or just until the next time that the property is sold and changes hands? Is there any reference to this in the POA act?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

We have a somewhat similar issue going on. Our front doors are all painted black and they are required to be black. One person decided to paint her front door white. She then put the house on the market and moved out of state. She has been notified of the violation but does nothing about.

We do not want an issue with somebody "unsuspecting" purchasing the house.

Some have said we should file a lien so at least the new buyer will be aware of the issue and have it corrected by the seller or at least the purchaser knows it has to be corrected even if by them.

Suggestions?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By MikeS1 on 06/28/2013 7:30 AM

5 years from now when the owner sells and they request another HOA packet with inspection, can they note the violation at that time? Is the the unapproved color grandfathered in perpetuity or just until the next time that the property is sold and changes hands? Is there any reference to this in the POA act?

Mike,

You are in a catch 22.

Per § 55-509.7 G the Association is bound to what is written in the disclosure package. When you issue a new package, the Association is stating if the current owner has any violations. Since the Association missed the violation in the initial inspection, the current owner is not in violation (because of § 55-509.7). Therefore, the Association can't now claim that the owner is in violation.

I would suggest that you issue a statement on the disclosure similar to:

The current paint color of the property are not in compliance with the Association Governing Documents. The paint colors of the property should be xyz. However, due to a clerical error, the current colors may stay until the property needs repainted. At that time, the property must be painted colors that are in compliance with the governing documents of the Association.

This way, the error will be corrected in a few years.

MikeS1
Posts: 521

Posted:

Thanks Tim4 - Really appreciate it.

MatthewW4 (Arizona)
Posts: 500

Posted:

Quote:

This certainly makes me proud to be an American. My heart races more than just a little bit knowing that we have sons and daughters dying in far-off wars so that we at home can be free to harass our neighbors over the most trivial of issues.

TimB4 (Tennessee)
Posts: 21,059

Posted:

John,

You may want to contact the listing agent and just inform them of this violation. Let them know that you have informed the owner but they have not been responsive and you don't want a new owner to enter into this situation being unaware.

Hope this helps,

Tim

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MatthewW4 on 06/30/2013 7:09 AM

Matt

One reason many of us moved here is the HOA does all exterior maintenance inur individual, stand alone patio homes HOA. This includes the landscaping and the exterior shell of each home. This "all inclusive" service does come with a "price tags", one of which is not allowing individuals to "decorate" as they wish. This is a price I for one am willing to pay as are 111 others. One out of 113 doing as she wishes is a low enough number. We can handle it.

JeffT2 (Iowa)
Posts: 880

Posted:

Quote:

Posted By JohnC46 on 06/28/2013 1:25 PM
We have a somewhat similar issue going on. Our front doors are all painted black and they are required to be black. One person decided to paint her front door white. She then put the house on the market and moved out of state. She has been notified of the violation but does nothing about.

We do not want an issue with somebody "unsuspecting" purchasing the house.

Some have said we should file a lien so at least the new buyer will be aware of the issue and have it corrected by the seller or at least the purchaser knows it has to be corrected even if by them.

Suggestions?

Simple. Paint the door black and send her the bill. Not expensive. And given that the house is up for sale, advise her that you will file a lien if she does not pay in 30 days. Your governing docs should give you this authority, especially since the HOA does your exterior maintenance and this is a continuing violation.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Jeff

I expect (pretty sure actually) our docs do give us the right. I have no issues enforcing such but candidly we are hesitant to take that action over a simple issue. Our maintenance guy said he would need the door fully opened and a few hours to sand, paint properly, and let it dry. We might could get the door opened by the realtor.

One reason we are avoiding action is the owner is a head case. I am sure we could expect her to start trouble over us doing so. In the long run we will not take any aggressive action.

MatthewW4 (Arizona)
Posts: 500

Posted:

Quote:

Posted By JohnC46 on 06/30/2013 8:56 AM

One reason many of us moved here is the HOA does all exterior maintenance inur individual, stand alone patio homes HOA. This includes the landscaping and the exterior shell of each home. This "all inclusive" service does come with a "price tags", one of which is not allowing individuals to "decorate" as they wish. This is a price I for one am willing to pay as are 111 others. One out of 113 doing as she wishes is a low enough number. We can handle it.

So what is the issue? Your association has the exclusive authority to paint the door back to its original color. Why all the business about filing liens, tracking down the now out-of-state owner, and hand-wringing over the "what-if's"? Take a can of paint over to the unit and paint the door black. Problem solved. And, yes, it is just that simple.

NameW (Virginia)
Posts: 74

Posted:

Mike, I see part of the problem here being an issue of over delegation. In my HOA, regardless of who prepares the Disclosure Package or does the inspection (we take front and back photos and include them as part of the disclosure package along with an inspection report, then PDF it all as one big 75 page + document which can be emailed or printed AND stored electronically as a record, as needed), it simply doesn't go out until the President or the Secretary/Treasurer signs the certification and affixes the seal to the certification document (which is then scanned into the PDF file as the first page of all). Unless you HOA is really hot with properties trading every 3 days, I would strongly suggest (especially since the problems you cite have clearly arisen) amending the Management agreement so that the management company continues to prepare disclosure packages, but deny them the authority to Certify. So that they can prepare it, but only an Officer of the HOA can sign the certification page. This would provide the clearly needed backstop. If the Board member misses something when they did their proof reading, well then (especially if it cost the HOA some money and a Covenant violation was allowed to slide by) there is recourse. In over a decade of doing it this way, not much has slid by the Officer signing the Certification page.

I have had experience where violations of Architectural rules pointed out in the Disclosure Package (illegal in ground swimming pool or garden shed, etc.) are challenged. Generally speaking the HOA has got to be able to produce a correspondence between the HOA and the lot owner showing this issue has been raised before the sale is proposed. Again we like PDF copies of mailed correspondence from the HOA and any written replies. Records organization is important. There should be at least 2 or 3 e folders the documents can be pulled from. General correspondence out or Architectural Committee files, the lot in question (address or #), and of course Disclosure Packages sent.

BTW, every few months I give a thumbdrive copy of ALL of our HOA records to the other Officers. That way, if I get killed in a car accident or some other craziness any Board Officer can pick up a lot of the pieces without having to deal with an estate Executor over access to a PC they may not wish to give access to.

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