closing on home in a week. HOA violations and escrow, how to protect?

PA resident

in addition to the things found by the inspector at my moms new house, we just got the certificate of resale from the HOA and there are violations. ivy grew up the side of the house and they took off the major part of it but of course there's tons of tendrils embedded in the stucco and its a very large area. from reading online, this is very difficult to fix and may even require taking off the stucco and applying new. sounds very expensive.

also all trim and columns need painted and some chimney work done.

what rights do we have. in the ideal world i would like

1. see their estimates to do all that work so we know enough is in the escrow ( but how do we ensure they arent just fly by night contractors)
2. have an extra 1 or 2 K in the escrow to 'ensure compliance'
3. language in the contract that the sellers are required to have HOA repairs approved by the HOA or they have to continue to fix since they have been in violation for a while now. i just worry since they dont own the property after next week, they will just walk away and not care.
4. in light of number 3 id like to put in language that they pay all atty fees if we have to sue to get them to comply with HOA rules that should have been complied with when they were owners (they were absentee landlords for 4 years after moving out of the property. did no maintenance as proved by the inspection)
4. id like to see the paid bills especially of things like the water heater so we get the warranty.

so how should we proceed? my mom is a nervous wreck.

something tells me that the stucco cannot be cleaned or taken down and replaced in winter, depending on how they can clean that vine mess. and i dont think either party wants to delay 3 months either. so this is the quandry. and i dont even know if the HOA was out recently or just these are old outstanding but the wording leads me to believe these are old outstanding

I understand not wanting to delay, but I wouldn't want to be responsible for something the previous owner knew about, but did nothing to address it.

It's your money, friend - if you want to close on this house with all of this going on, go ahead, but don't whine when you find additional problems or the HOA comes in and says now this and that is a problem. When that happens, YOU will be on the hook for getting it fixed.

I assume that your Mom has an attorney that specializes in real estate transaction. If not, you need one now.

You have listed a number of concerns - all valid. If you want to proceed with the sale and be protected against financial loss (not aggravation), you need your attorney to prepare a legal agreement for the Seller to sign. This agreement needs to be backed up with money placed in escrow until the terms of the agreement are satisfied. The escrow money is your Mom's money that does not go to the Seller until all terms are satisfied. The agreement must establish a date for completion and what constitutes satisfaction. If either are not met, the escrow money (or a portion) returns to your Mom so she can have the work done herself.

Good luck, Jim

"Rights" isn't the correct word. If you've already signed the contract, it's probably too late for any additional demands. If you are still in negotiations, you can ask for anything. I doubt that any money would be placed in escrow for you, only that the sale price could be dropped.

1) Require the sellers to complete the work before the sale
2) Not likely
3) You can ask, but the sellers would be ill advised to agree to this
4) Ditto times four
5) You can ask, but what if they don't have the bills anymore?

well per the inspection documents if things arent fixed, she doesnt have to buy the house. of course she spent a ton of money on inspections already. near 2K id say. so i guess in theory if things arent fixed by closing she can walk and get the down money back at least. legally. and if the sellers wont agree that HOA must approve their repairs then i guess she will have to walk because no way does she want open ended liabilty for stuff the owners should have done years ago. regarding the bills. the water heater was installed friday as well as other work. if they dont have the bills from last week thats pretty sad lol.

No, she can walk and ask for her money back. It's up to the sellers or the courts if she gets her money back.

Hi Lucky.

Your mom received a form 5407 (HOA) or 3407 (Condo) Resale Certificate. Here is a link to standard form 5407 that you can compare yours against: http://www.parealtor.org/clientuploads/Legal/LawsRegs/SampleResaleCertificate.pdf

The purpose of the Resale Certificate is to put you on notice of all outstanding obligations before you complete the transaction. If the HOA left something out, then they cannot come back to your mom after the sale is consummated and say something else needs to be done. The HOA has the right to expect that any obligation listed in the 5407 transfers to the buyer if not taken care of before the closing.

NOTE THAT UNDER PA LAW, YOU CAN CANCEL THE SALE FOR ANY REASON (MOST LIKELY BECAUSE YOU FOUND SOMETHING OBJECTIONABLE IN THE 5407) UP TO 10 DAYS AFTER YOU RECEIVE THE 5407. ANY DEPOSIT MONEY MUST BE REFUNDED TO YOU.

Here are a few thoughts and suggestions:

1. Contact the person who filled out the 5407 for the HOA. Probably someone in the management company office. Ask how prevalent the problem was and what actions the HOA took against other homeowners who had similar stucco deficiencies. If that person is not helpful, ask to speak with whoever is in charge of the Architectural Control Committee. If that person is not helpful, ask to speak with a Board member. You can learn a lot about how the HOA operates through these conversations. Also, ask to see a copy of the Change Request Form (can go by a variety of names) that the seller submitted to the HOA to get the work approved.

2. Is your mom getting a mortgage? Many mortgage companies will not allow the closing to occur until items listed on the 5407 are complete.

3. Your best bet is to escrow funds on anything that needs to be done after the closing. You can try to include potential legal costs in the amount escrowed, but it is unlikely that the seller will agree to it.

4. If you have any questions about the equipment and warrantees that you are getting from the seller, get that information and resolve any questions with the seller if you can before the closing.

5. It is unlikely that the HOA did or intends to do an interior inspection (maybe different if it is a Condo).

6. If I were you, I would probably get my own stucco contractor to come in and make recommendations.

All for now.

I knew that didn't look right when I hit submit but I couldn't figure out why. In the immortal words of Homer Simpson Duh!

Lucky, perhaps your mom should cut her losses and run but at the very least, she needs to get an attorney involved to protect her from this potential money pit.

So now she's going to buy it?

Wrong answer. That's the whole purpose of the 5407. If you want to rely on her answer, get it in writing.

Where is PA is the house?

All this means is that in addition to being able to go after the new owner, they can ALSO go after the prior owner. Rarely if ever happens if the new owner has equity in the house.

Well Lucky, you and your Mom are very lucky to have found this out before closing. It's good to see that some of the newer laws are actually helping buyers and HOA's. What the current board says will happen is no guarantee of what a future board will do. If you and your Mom love to have constant drama in your life, then she should buy it and live happily ever after. But if you prefer a peaceful life, end it and find another one.

Ps, not sure if it would hurt stucco, but we have used salt water to kill ivy, successfully.

Other than past due assessments and/or fines, you will be responsible to fix any violations to the HOA's satisfaction.

Legally (I suspect), once sold, the past seller has no legal obligation to fix anything on the property. The buyer bought the property as is (that is what the written contract will say). Similar to other issues identified in a home inspection, You are aware of covenant violations. As the new owner, you purchase based on information you are aware of and agree to accept the home with those issues and deal with whatever consequences are associated with those issues.

All,

I know I'm late with my previous posting on this thread. In reading everything I failed to read before responding, it appears that there is some agreement that the money to repair the items will be held in escrow (this was stated in a different thread).

See: http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/186865/view/topic/Default.aspx HOA holding escrow for repairs..common

Waaay to complicated. If I was a seller, I would refuse your request. Simply get your own estimates for the work needed to be done, reduce the price of the house by that amount. Next? Fix it yourself.

Also Lucky ... You really should keep all your issues in one thread. This makes it easier for everyone to comprehend the full issue vs. parts and pieces.