Issue with Conflicting HOA Closing Documents

Hello all,

Our HOA currently has an issue with an owner who is refusing to pay their HOA dues because he has a signed addendum document from the seller which states there are no association dues, fees, or assessments.

They presented a document secured at closing titled "HOMEOWNERS DUES AND ASSESSMENTS" which shows two options:

I. _____ Seller hereby represents to the purchaser that all Homeowners Association Dues and Assessments have been paid current on the property being sold.

Seller states the last month / quarter / year (circle one) dues were $_________.

II. __X__ Seller states there are no association dues, fees or assessments.

(area with parties signatures & dates)

Where it gets sticky is in the fact the PUD Rider lists the CCR stating the property does in fact belong to an HOA and is governed as such. What does the law say when there are conflicting reports like this? Can the HOA go after the current owner or the previous owner? I am aware the HOA responsibility typically transfers with the property, but in this case, the owner essentially possesses an estoppel from collecting dues and it almost seems like the responsibility therefore remains with the previous owner/seller. The previous owner/seller also did not pay their last year of dues, which further complicates matters. I feel the need to proceed with caution as litigation could pile up the legal fees quickly and this seems like a coin-flip at best. I've personally never seen a conflicting situation like this.

Is there precedence for something like this? What say ye - is it more beneficial to pursue the new owner or the previous owner?

IMO, the individuals responsible for reviewing the closing documents prior to closing. Not sure who does that in OHIO, whether it's an escrow, title or attorney.

The PUD Rider is a dead give away. Having been on the mortgage side, the lender obviously knew as they prepared the rider for signature and recording. The appraisal would also have stated there was an HUD. It looks like the form might have been included with the Real Estate Purchase Contract.

IMO, if the buyer signed the PUD Rider, then whether or not they knew what they were signed, by signing, they acknowledged they knew they were in an HOA, or should have asked.

Or it was a simple typo that nobody (not the closing agent, the sellers Realtor, the Buyers Realtor or the seller) noticed.

However, the improper documentation at selling issue isn't with the new owner and the HOA.
The issue is with the seller, the closing company and the title insurance.

The failure to pay assessments is between the HOA and the seller.
I suspect that a letter from the Associations attorney will get the new owners attention.

Perhaps an agreement between the new owner and Association to have the money placed in escrow while the issue is being resolved can be worked out as a compromise.

One more note, any valid estoppel that was binding on the association would have to come from the association. Your case is like me telling you that you are no longer obligated to pay income taxes. You might believe me, but the IRS wouldn't be buying it.

If the property does indeed belong to the HOA- then the buyers have recourse against the sellers for fraud. The document signed by the seller is a disclosure, not binding on the HOA.

The HOA still goes after the buyer for dues. The buyer owns the property and is responsible. If he wants to pursue the seller it's his business.

The HOA can still lien for unpaid dues. The problem is between the seller and the buyer in regards of disclosure. The seller is responsible for turning over the HOA documents at closing in many states. Plus the HOA are PUBLIC documents available at the court house if they are indeed properly filed. It is viewed as the Buyer's responsibility to be informed there is an HOA. However, in this case they were informed wrongly by the seller. Which can constitute a fraudulent sale. The buyer has a lawsuit against the seller but NOT the HOA. The HOA does NOT own the property. The HOA does need to collect their dues. So I would make sure to have a policy in place when you place a lien for unpaid dues and pursue it. Ours is 6 months unpaid we lien. That way it's not random and equal to all owners when they have to pay. If they want to fight the lien, then the issue will be sorted out then.