Seller misinforming buyer about CC&RS?

I was contacted last night by one of our homeowners. She told me that the house next door to her was being sold and in conversation with the current owner she learned that the buyer intends to park a 30' motor-home next to the house. This will be in violation of our CC&Rs. Apparently the seller's agent told the buyer that there would be no problem with parking the motor-home there.

If this is true then ultimately I believe that the buyer will have a case against the seller and the agent, but not before a lot of headache for both the buyer and the HOA. It would be nice if we could inform the buyer of the restriction before they actually close, but my belief is that if we did something like that and the sale fell through, the seller could come after us. I'm not even sure if it would be acceptable for us to contact the selling agent and remind them of the CC&Rs. Since all we have so far is a second-hand comment from a neighbor, I think the only thing we can do is wait and try to let the new owner know of the restriction before they spend a lot of money building a trailer pad.

This is in Idaho and we do have a pre-sales disclosure law, but I believe that only covers known existing problems with the property, not problems with the buyer's future plans.

Any thoughts?

Roger - contact the owner - on hearsay? That is still interference with a sale. In Arizona a planned community must provide a stated list of documents to the BUYER within 10 days after receiving a WRITTEN notice of a sale. So Dwight would need to wait for that written notice before he could provide ANY information to the buyer. That's the total of the association's involvment. Anything else is interference with a sale.
If a seller and/or his agent mislead a buyer, the buyer has recourse against them, but if they continue with the purchase after getting the documents from the HOA then who can they blame? They would only have recourse against the HOA if they failed to provide the information required by law in the time specified. Of course it could provide a headache, but trying to head it off at the pass could become an ever bigger headache. Harold

I don't live in AZ either, but I agree with Roger. If the HOA approaches the buyer and says it heard a rumor about an RV, even if it was true or not the buyer may start wondering about their privacy and if the HOA is nosy and running off of rumors instead of fact.

If you approach the seller they can decide whether to be truthful or not. In the event they are not and the buyer brings suit against both, the HOA can point to a letter it sent to the seller advising them to disclose to the buyer. At that point it is up to the seller to disclose and the buyer to read. I personally wouldn't get involved with a buyer, unless I had to.

Roger and Brad - you missed the entire point - this statue requires the HOA, if larger than 50 units, to supply the buyer with the specified information AFTER receiving notification of a pending sale in writing. Under 50 units it is "a member's" (doesn't say seller) responsibility to supply this information. Here is the entire statue. Sorry it is very long.

33-1806. Resale of units; information required; definition

A. For planned communities with fewer than fifty units, a member shall mail or deliver to a purchaser within ten days after receipt of a written notice of a pending sale of the unit, and for planned communities with fifty or more units, the association shall mail or deliver to a purchaser within ten days after receipt of a written notice of a pending sale that contains the name and address of the purchaser, all of the following:

1. A copy of the bylaws and the rules of the association.

2. A copy of the declaration.

3. A dated statement containing:

(a) The telephone number and address of a principal contact for the association, which may be an association manager, an association management company, an officer of the association or any other person designated by the board of directors.

(b) The amount of the common regular assessment and the unpaid common regular assessment, special assessment or other assessment, fee or charge currently due and payable from the selling member.

(c) A statement as to whether a portion of the unit is covered by insurance maintained by the association.

(d) The total amount of money held by the association as reserves.

(e) If the statement is being furnished by the association, a statement as to whether the records of the association reflect any alterations or improvements to the unit that violate the declaration. The association is not obligated to provide information regarding alterations or improvements that occurred more than six years before the proposed sale. Nothing in this subdivision relieves the seller of a unit from the obligation to disclose alterations or improvements to the unit that violate the declaration, nor precludes the association from taking action against the purchaser of a unit for violations that are apparent at the time of purchase and that are not reflected in the association's records.

(f) If the statement is being furnished by the member, a statement as to whether the member has any knowledge of any alterations or improvements to the unit that violate the declaration.

(g) A statement of case names and case numbers for pending litigation with respect to the unit filed by the association against the member or filed by the member against the association. The member shall not be required to disclose information concerning such pending litigation which would violate any applicable rule of attorney-client privilege under Arizona law.

(h) A statement that provides "I hereby acknowledge that the declaration, bylaws and rules of the association constitute a contract between the association and me (the purchaser). By signing this statement, I acknowledge that I have read and understand the association's contract with me (the purchaser). I also understand that as a matter of Arizona law, if I fail to pay my association assessments, the association may foreclose on my property." The statement shall also include a signature line for the purchaser and shall be returned to the association within fourteen calendar days.

4. A copy of the current operating budget of the association.

5. A copy of the most recent annual financial report of the association. If the report is more than ten pages, the association may provide a summary of the report in lieu of the entire report.

6. A copy of the most recent reserve study of the association, if any.

B. A purchaser or seller who is damaged by the failure of the member or the association to disclose the information required by subsection A of this section may pursue all remedies at law or in equity against the member or the association, whichever failed to comply with subsection A of this section, including the recovery of reasonable attorney fees.

C. The association may charge the member a reasonable fee to compensate the association for the costs incurred in the preparation of a statement furnished by the association pursuant to this section. The association shall make available to any interested party the amount of any fee established from time to time by the association.

D. A sale in which a public report is issued pursuant to sections 32-2183 and 32-2197.02 or a sale pursuant to section 32-2181.02 is exempt from this section.

E. For purposes of this section, unless the context otherwise requires, "member" means the seller of the unit title and excludes any real estate salesperson or real estate broker who is licensed under title 32, chapter 20 and who is acting as a salesperson or broker and also excludes a trustee of a deed of trust who is selling the property in a trustee's sale pursuant to chapter 6.1 of this title.

©2007 Arizona State Legislature. privacy statment

Harold:

I didn't miss your point, read it exactly and that is why I said I don't live in AZ. Obviously in your state you are required to, in my state I wouldn't.

Well, thanks for all the advice. But it looks like the seller left yesterday, so we don't really have a way to contact them any more to ask about the neighbor's comment. Since they are gone I'm guessing that the closing happened yesterday also, so it looks like it's a moot point. We'll just have to handle the RV situation when it comes up.

One of the other Board members has suggested that to avoid something like this in the future, we should provide a copy of the CC&Rs to every homeowner when they put their house on the market and ask them to pass it on to their agent. I think that might be overkill: I'm pretty sure agents are supposed to be aware of the CC&Rs anyway (any suggestions for search terms on the States law web site? I tried 'real estate AND disclosure', but that didn't get me anything about HOAs).

My feeling is that a simple one-page flier would suffice, pointing out that our CC&Rs are available online and maybe even offering to include the home in a list of available properties on our web site. That would also give us a chance to remind sellers & agents about the "no signs on common-areas" restriction.

We recently had a home go on the market and the MLS listing said "RV parking". We had sent the owner a violation letter because they have an RV parked on their lot without it being enclosed with a 6'fence -- our requirement if you want to park an RV in your backyard or sideyard.

Since they are technically in violation and they haven't constructed the fence, our MC contacted the listing agent and pointed out that her listing was inaccurate and that an RV couldn not be currently parked on the lot without violating HOA CC&Rs. The listing agent immediately removed this information from the listing and their advertising.

We also had a problem with an owner placing an oversized 4x5' for sale sign on their property, in violation of our CC&R size maximum for real estate signs. Again, a quick email to the agent was all it took for it to be corrected.

I think due to all the regulations that have to be observed by real estate agents and their concern about losing their license, it is most effective to deal with the agents rather than the homeowners. I don't know why it wouldn't be considered acceptable to inform a real estate agent that they are mis-representing a property. In fact, you would be doing them a favor!

Kimberly:

All you need to know when you buy into an HOA is located at your county courthouse. All the Covenants and Restrictions are filed there, go get a copy and read them. Furthermore, if they are not file there then they are not valid. Any seller who is not truthful in the sales process sets themselves up for a lot of problems.

Again, Brad speaks the truth.

A potential buyer should be able to request these documents from the real estate agent or the seller. I did. Anyone who would make the biggest purchase of their lifetime without checking these documents shouldn't be spending money without supervision.

As have we.

I actually have to e-mail the CC&Rs because we use a cheap hosting site with size limits but all the information is there for the prospective buyer. And yes, I've done this several times.

I'm not sure if it really matters, but on both sides of our entrance (entering and leaving) there are signs indicating that the neighborhood is controlled by covenants.

We would hope that anyone thinking of keeping a motor home on their property would check first. If they don't, it's their problem, not the HOAs.