need to disclose insufficeint dues for long term needs?

This is a subjective type question. Some of it relies on the moral compass of the seller. However, there is some misconceptions or misinformation to address first. The first of which the health of the HOA is indeed evaluated on certain types of loans. Mostly FHA based loans but Freddie Mac/Fannie Mae are starting to use the PUD form FHA uses. That form is a 25 questionnaire that works like an HOA appraisal. It does have the HOA fill out the form behind the scenes that does state the overall health of the HOA. Which if your HOA has the ability to qualify for FHA type loans lenders may already know this information. Which effects refinance rates and/or type of loans/rates of new ones. Your issue will come down basically to the availability of qualified buyers because mortgage companies may consider your HOA property a higher risk.

Your HOA property values are based on REAL numbers. A HOA does NOT maintain, increase or decrease a home value. That is a misconception. It does effect the ATTRACTIVENESS of bringing in potential buyers. Buyer's can decide not to buy a house because they hate the wall paper. Doesn't devalue the home. It just limits the number of buyers who may like the wall paper enough to buy it. Home Values are based on what other homes of similar size and amenities have sold or foreclosed for in a few mile radius in the last 6 months.

For disclosure issues. It is viewed as the buyer's responsibility to be informed. The seller just needs to provide the HOA CC&R's, Articles of Incorporation in many states at closing. Remember a potential buyer is NOT a HOA member until they purchase the home. So they don't have the rights of a HOA member. Disclosure is up to the HOA if buyer was to inquire. Otherwise your responsibility is just to provide your HOA documentation. Your moral compass is what would lead you to reveal more than that.

TimG of SC wrote: "Once again, I don't need more opinions, just actual events."

And Melissa replied by cutting and pasting (almost) all of her most treasured pearls of, um, hmm...

Sorry to say I can't answer your question TimG, but I believe the language you're looking for is "underfunded reserves"??

I have not heard as you have about appraisals being "lowered" in CA if reserves are underfunded. I do know to get FHA certification, the property or condo must have more than 10% funded, which is a very low bar.

Curiosity: Why do you ask?

Don't hold your breath. Most of us on this site are long on opinions. There are few lawyers on this site and aside from a couple of serious whacko's, very few who have ever been involved in litigation of any type, much less a lawsuit for failing to disclose underfunded reserves. The resources most of us have is the same Google search engine available to you.

To find the information you are looking for you may want to try Westlaw. They are not cheap but they have access to just about anything a lawyer could ever ask for. This is such an unusual topic that I doubt you will find much of what you are looking for.

Washington State failed to pass a bill re setting reserve requirements:

"Reserve Funds – HB 2820 would have required that by January 1, 2015, associations with twenty-five or
more unit owners be encouraged to establish a reserve account and maintain at least a seventy percent
funding level in the reserve account as determined by using the association's most current reserve
study. This legislation did not receive a hearing and did not pass, but it is an illustration of legislators
beginning to hear more and more from their constituents about underfunded reserves."

Source: http://www.caionline.org/events/lawsem/2011%20Law%20Seminar%20Presentations/LegislativeUpdate.pdf

IMO, if no state statute, hard to hold anyone liable.

I've been treasurer for 1 1/2 years, and never had an appraiser or lender ask about our finances or reserves. When houses are sold, the closing agents send an estoppel request that asks if there are any current special assessments, and sometimes they also ask about pending special assessments. They never dig deeper than that.

Lots of good advice in all the comments above even if Tim G2 doesn't want it.

"If in doubt disclose" is sound. But to take it further, lay people are usually best served to do it timely & fully and to provide it to their own insured, competent professionals to whom they should retain and can prove hardcopy proof of passing disclosure triggering information knowable only by the vendor.

Where legislatures require and even detail condo/HOA estoppel or status certificates formats, vendors should leave that to the professionals in replying to buyer diligence requisitions.

There are cases in my jurisdiction where self managed Boards erred materially in preparing those directly for purchasers, lenders or the general public. Or failed to cite the most up to date revised RFS ( that would warn of a special assessment not far away ). Or wrongly cited the most current fees.

The consequences should not be risked rerouted by a vendor's choice to start doing the pronouncing personally.

Tim G2 (S Carolina) : “ Why did someone have the nerve to say that I don't want opinions ? I specifically said I already had "opinions' from several lawyers but none knew of any actual cases. Some (most) thought it would be wise to disclose and some weren't sure if one could be sued or not if they didn't disclose. "

Actually and respectfully, it was you yourself who said it :

Above : " . . . I'll check back in a week or two for any replies.
Once again, I don't need more opinions, just actual events."

TimG

Most buyers do not even read the Covenants nevermind delve into the financials. There can also be differing opinions on how much reserves will be needed. Unless one has had a Professional Reserves Study done then there will rarely be agreement on what is needed.

There are two camps in most associations. One camp says get the study done and fund what is needed as we go along. The other camp says wait until something happens and then assess all owners.

Some states dictate, or have tried to, how much should go into the Reserves (like say 15% of dues) but most agree that one size does not fit all.

Is it the association's obligation to protect buyers from themselves? Are we our Brothers Keeper?

Fool me once, shame on you. Fool me twice, shame on me.

( I hesitate to dare provide the following. There are excellent S Carolina commenters & Time G2 has originally posted : " Once again, I don't need more opinions, just actual events."

1- Good reading is South Carolina's Real Estate Commission where platformed to promote SPIS-type disclosure statements by S Carolina SECTION 27-50-10 ("Property and Conveyances" CHAPTER 50; The Residential Property Condition Disclosure Act; Article 1 - Residential Property Condition Disclosure Statements viewable at http://www.scstatehouse.gov/code/t27c050.php

The main Aug 1/13 version of the resale disclosure form contains an Addendum by which the S. Carolina R/E Commission ( http://www.llronline.com/POL/REC/ ) requires (with some arguable force of law ) as follows :

"Disclosure Statement Addendum

Prior to signing contract, owner shall provide this disclosure addendum to the purchaser if the property is subject to a homeowners association, a property owners association, a condominium owners association, a horizontal property regime, or similar organizations subject to covenants, conditions, restrictions, bylaws or rules (CCRBR). These organizations are referred to herein as an owners association."

http://www.llronline.com/POL/REC/RECPDF/Residential%20Property%20Condition%20Disclosure%20Statement%20Addendum.pdf

Readers should check that Addendum to consider whether reserve funding inadequacy/ insufficiency is adequately triggered against the vendor by the 11 headings within that Addendum.

2- SPIS-type Disclosure Documents in my jurisdiction's non condo realty environment, have gained wide notoriety for generating litigation.

Dozens of lawsuits have been generated, outcomes sometimes turning centrally on otherwise uncompellable disclosures by vendors. The document may sometimes not protect realtors despite the intention to slope-shoulder diligence onto the vendors instead of the purchasers/realtor/home inspectors.

One non-condo shocker was a judge deeming the present tense in "Is there a leak problem ?" to include past tense " HAS there ever been a leak even already rectified ? ". Bad news but maybe good for litigators.

I am not aware of condo outcomes here where reserve fund adequacy has been litigated against the condo vendor.

But there is a track record of such errors within condominium (estoppel-type) certificates via undisclosed special assessments & outdated reserve fund studies where both have Bad News replacements unofficially in progress. Self-managed associations/ D.I.Y. are especially vulnerable.

Individual vendors should take great care.

The intro of the form says:

Prior to signing contract, owner shall provide this disclosure addendum to the purchaser if the property is subject to a homeowners association, a property owners association, a condominium owners association, a horizontal property regime, or similar organizations subject to covenants, conditions, restrictions, bylaws or rules (CCRBR). These organizations are referred to herein as an owners association.

The actual questions on the form are:

1. Are there owners association charges or common area expenses?
2. Are there any owners association or CCRBR resale or rental restrictions?
3. Has the owners association levied any special assessments or similar charges?
4. Do the CCRBR or condominium master deed create guest or visitor restrictions?
5. Do the CCRBR or condominium master deed create animal restrictions?
6. Does the property include assigned parking spaces, lockers, garages or carports?
7. Are keys, key fobs or access codes required to access common or recreational areas?
8. Will any membership other than owner association transfer with the properties?
9. Are there any known common area problems?
10. Is property or common area structures subject to South Carolina Coastal Zone Management Act?
11. Is there a transfer fee levied to transfer the property?

No where are reserves discussed nor any mention about the budget, financial statements, etc.

Thanks BobD4 and John C46. It doesn't seem that it is clear but it seems like it maybe worth it to let potential buyers know, especially if the HOA has already expressed that they anticipate a large cost to re-pave the roads in our community. Better to be safe than sorry.
My wife is a real estate appraiser and they used to have to include on an appraisal whether a HOA had sufficient funds for long term expenses, but this is no longer the case. I'll read up the area of SC law that you referred to.
Thank you and all others who replied.

Two weeks ago I received a form asking those types of questions. It was from a mortgage company that our newest buyers are using. It asked about assessments and if any are planned. If any major projects have enough funding. Then the percentage going into reserves, delinquencies, renters. They also wanted a copy of our budget and insurance info.

Usually I only get an email asking if there are any CC&R violations. This was the first time I have been asked the other questions. That could be because we are 55+ and have mostly cash buyers.

When our units get to escrow the buyer receives a CD with all information required by law and more.

Most people just ask. I get calls from prospective buyers. Only an idiot would not want to know those things. My point was the person's financing company never asked before.

You have just stated the PRECISE issue with the 'western' business model.

Under said model: legal = moral

Yet the majority of 'westerners' consider themselves to be 'christian'.

We are the victims of ourselves.