Before You Buy Into an HOA: Read This

Started by MarkT11 • 49 replies • 1240 views

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MarkT11 (Michigan)
Posts: 2

Posted:

I'm always coming across questions from other people on various sites and while HOAs can either be a good or bad thing, I dislike them on principle. But, in my many years of searching for information, I've noticed a few things that everyone should be aware of when you're purchasing a home and whether an HOA can affect you. I hope this will serve as a basis for everyone reading this and I hope this helps you. Please be aware that I'm neither an attorney nor a real estate agent, this information has been discovered through my own curiosity.

1. When you purchase a home in a neighborhood, the home-owner or Real Estate Agent is required by law to inform you if the home you're purchasing is under the management of a Home Owner's Association. This has to be disclosed at the time of sale. If you purchase your home, an HOA cannot form under your nose and then demand you pay association dues. An example of this is if you've been living in your new home for anywhere from the first day to as long as a few years, you are not bound by the HOA, you don't have to pay any dues and the HOA has no influence in what they can demand you do with your property. If you buy a home, it has to be disclosed at the time of say whether there is an HOA attached to your home, meaning you have to agree to abide by the rules of the HOA. They cannot simply demand you pay dues and to follow their CCR's after you have purchased it. Oh, they may try to bully you or harass you into agreeing and paying but don't fall for their tricks.

2. Second, before you sign anything, make sure that the HOA that manages the association is legit. There are a few ways to tell, which your HOA is require to provide to homeowners, these are called governing documents:

* articles of Incorporation
* bylaws
* Declaration of Covenants, Conditions and Restrictions (CC&Rs), and
* rules and regulations.

Don't believe the HOA is they tell you this, ask to examine these documents. The Association is typically created by filing Articles of Incorporation (“Articles”) for a nonprofit organization with the secretary of state where the development is located (although some states allow unincorporated associations). Before any property in a condominium or planned development is sold, the developer forms a Condominium or Homeowners' Association to run it.

3. If you purchase a home and you're not presented with CC&R's to sign, then you may not be required to pay any dues or adhere to the rules. I haven't found out anything on this but every HOA is required to present a new homeowner with a copy of the CC&R's prior to purchasing their property. They can't spring those rulers on the new homeowner after they have purchased because that could be seen as a deceptive practice.

As always, I recommend looking into HOA regulations in your own state and talk to a licensed attorney about HOAs and just ask every questio0n you can think of.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Alot of misinformation in this post. If was not on my tablet i would post more. Just really misunderstanding on many thinfs...

Former HOA President

MarkW18
Posts: 1,290

Posted:

I am waiting on the edge of my seat.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By MarkT11 on 10/21/2019 8:47 PM

If you purchase your home, an HOA cannot form under your nose and then demand you pay association dues. An example of this is if you've been living in your new home for anywhere from the first day to as long as a few years, you are not bound by the HOA, you don't have to pay any dues and the HOA has no influence in what they can demand you do with your property.

This is not entirely correct.
An HOA and deed restrictions (aka, the Declaration of Covenants, Conditions and Restrictions, aka CC&Rs) are two different things.

If deed restrictions do not exist when you purchase, they can not be added without your consent.

Quote:

Posted By MarkT11 on 10/21/2019 8:47 PM

2. Second, before you sign anything, make sure that the HOA that manages the association is legit. There are a few ways to tell, which your HOA is require to provide to homeowners, these are called governing documents:

* articles of Incorporation
* bylaws
* Declaration of Covenants, Conditions and Restrictions (CC&Rs), and
* rules and regulations.

This is a bit off as well.

Although it's true that the HOA is required to allow a homeowner (aka member of the Association) to review the documents and, if requested, provide a copy for a fee, an HOA does not have to provide any of the documents to non members (aka buyers).

Once your purchase your home, if there are deed restrictions attached (regardless if you knew about them or not) you are a member of the Association and must comply with the terms of the governing documents.

If you want to review the documents prior to purchase (which is an excellent idea), make it a condition of the sale and it will be the sellers job to get that information from the Association and forward it to you (as the seller is a member of the Association).

Quote:

Posted By MarkT11 on 10/21/2019 8:47 PM

The Association is typically created by filing Articles of Incorporation (“Articles”) for a nonprofit organization with the secretary of state where the development is located (although some states allow unincorporated associations).

This is very wrong.

As stated earlier, an HOA is created via the Covenants, aka deed restrictions.
The Corporation (aka HOA, INC.) is created by filing paperwork with the State.
Typically, HOAs incorporate as a not-for-profit (vs. a nonprofit) corporation.
However, not all States require that an HOA be incorporated and there are unincorporated HOAs.

Quote:

Posted By MarkT11 on 10/21/2019 8:47 PM
I haven't found out anything on this but every HOA is required to present a new homeowner with a copy of the CC&R's prior to purchasing their property.

This varies by State.
Some States require that the seller (not the HOA) provides you with the governing documents.
Some States do not.

I've seen nothing that specifies an HOA must present a buyer with anything.

Quote:

Posted By MarkT11 on 10/21/2019 8:47 PM

They can't spring those rulers on the new homeowner after they have purchased because that could be seen as a deceptive practice.

Please cite, or provide a link to, the statute or court cases that support this opinion.

Quote:

Posted By MarkT11 on 10/21/2019 8:47 PM

3. If you purchase a home and you're not presented with CC&R's to sign, then you may not be required to pay any dues or adhere to the rules.

VERY VERY VERY WRONG.

First and foremost, a buyer typically does not sign the CC&Rs.
Some States may require this, but not in the Statutes I have seen.

A buyer should, but does not always happen, be told about deed restrictions when they purchase.
Mistakes happen.
When I purchased my 2nd home, the closing company said that there wasn't an HOA as they could not find any deed restrictions.
I, the buyer, corrected them and provided them a copy of the deed restrictions.
Again, mistakes happen.

Quote:

Posted By MarkT11 on 10/21/2019 8:47 PM

As always, I recommend looking into HOA regulations in your own state and talk to a licensed attorney about HOAs and just ask every questio0n you can think of.

This is excellent advice.

I would add one thing.
Ask to see the financials and 3 to 6 months of board meeting minutes.
This can help you to determine if the Association is on firm financial footing or if a special assessment is around the corner.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The Real Estate agent is NOT responsible for providing this information. It is the buyer's responsibility to be informed. Hence that is why the CC&R's and Articles of Incorporation are PUBLIC documents. The HOA, closing lawyer, title company, bank, or Realtor are NOT on the hook for providing HOA documentation. However, in some states (NOT All) do require the seller to provide the documents at closing. By-laws are HOA documents and are not usually considered "public". A few states or HOA's may file them with the CC&R's.

Tim points out many of the points that are not quite right or accurate. There is no "Signing" of CC&R's in most states that I know of. Once you become an owner you are bound by the deed restrictions automatically by virtue of their existence. A few HOA's may have something to "sign" but that would be a HOA by HOA thing.

Providing misinformation can be more of a dangerous thing. If I had read this advise I would have made or blamed many people who weren't responsible for my choices living in a HOA. So tread carefully before feeling like an expert. I am no expert myself. No one is. We just have been through a few things and learned a few lessons...

Former HOA President

MarkW18
Posts: 1,290

Posted:

I also dislike HOA's in principle for what they become AFTER turnover.

The OP does make some good points, and points that should be the norm rather than the exception. In large parts of the United States, the only homes being built, because of local regulations, must reside in an HOA. The buyer should have the burden to educate themselves before buying into an HOA, but we make it more difficult than it should be. There should be no excuse that information such as governing documents, minutes and financials be made available for people to view. You're not disclosing national secrets afterall.

I wouldn't hire the vast majority of individuals that sit on HOA Boards. A number of the posters here started in bad HOA's and fought to make changes, and over time were able to see positive results. Then one day you get booted off as Treasurer and things start to slowly revert back to the way they were.

We just found out recently that Arizona has a state statue that requires condo buyers to sign an acknowledge of acceptance of the documents that govern their HOA. This is a first I have seen. I rather have a person that knows what an HOA is and what's involved, living in my community than one that has no clue. More transparency could help that.

While some of the OP's post had some inaccuracies in it, they had a far better understanding than some of the regular posters here.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By MelissaP1 on 10/22/2019 4:15 AM

The Real Estate agent is NOT responsible for providing this information.

Yes and no.

The real estate agent creates the MLS listing based on what the seller provides.
However, if an HOA exists, it needs to be included in the MLS listing.

This does vary by State

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By MarkW18 on 10/22/2019 5:53 AM

While some of the OP's post had some inaccuracies in it, they had a far better understanding than some of the regular posters here.

Agreed

BillH10 (Texas)
Posts: 1,217

Posted:

The issues I have with Mark's post are contained in item 1; I realize he is in Michigan and there are state-by-state variations with which he may not be familiar. He makes some statements as absolutes, I have no doubt an association attorney with take issue with some of those statements.

I have never seen a multi-list form in Texas which does not require a positive entry yes or no on the HOA line, that document has to be signed by the seller. In my experience, the listing agent knows the listing is in an HOA, asks the owner, or sometimes calls the management company as owners sometimes do not know they are in an HOA or understand what a HOA is. There is no excuse for the buyers agent not to know the property is in a HOA.

Secondly, a prospective buyer in Texas has the right to request a number of documents and other information (Declaration, Amendments, Rules and Guidelines, Balance Sheet, assessment amount, pending assessment changes or special assessments, compliance issues on the subject property, information regarding pending lawsuits, statements of association insurance, etc.) during the option window. The title company invariably contacts the management company, if there is one, for the documents as the documents the owner was given at the time of purchase are likely outdated or the owner simply does not have ready access to much of the information. A buyer does not have the right to request financial information other than the Balance Sheet although we generally provide it if asked and the request is simple. In over ten years of managing property owners associations, we have been asked perhaps three times for additional financial information by a buyer.

Finally, to protect everyone concerned, the title company requires receipt of a document signed by the prospective buyer acknowledging receipt of the association documents before they will close the sale. The signed receipt becomes a part of the permanent record of the sale. I doubt one buyer in ten (if that) actually opens the files and reads what they contain.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Michigan has a Condo statute but no HOA statute.

I would suggest that any buyer read Michigan's Condo Buyer Handbook. See link below.

https://www.michigan.gov/documents/lara/CONDO_BUYER_HANDBOOK_2017_597089_7.pdf

While some of the content may not apply to an HOA, a lot of the advice would be suitable.

For the OP to be helpful to other potential HOA buyers, I would recommend starting with Michigan's document and modify it as needed to address HOAs.

Sikubali jukumu. Read all posts at your own risk.

MarkT11 (Michigan)
Posts: 2

Posted:

What I posted was correct. Leave it to a former HOA president to slam my post. If you have owned your home for a period of time and then an HOA forms around you, you are not required to join the HOA and the association cannot force you to join. The HOA is legally, out of luck.

HOAs are required by state law, it doesn't matter what state you are in, that for every residential home that is in their association, they are required by law to provide a copy of the CC&R with that property. Going off that, HOA's are required to present a copy of the CC&R prior to signing on to purchase the home. HOAs are required by law to present these. HOAs who do not have the proper paperback deeming them a legal HOA, cannot force someone to join. There are instances where illegal HOAs were sued by the entire community for illegally collecting fees when the HOA wasn't registered with the state they were in.

There is no getting around this. I've been looking into this since the early 1990's when I first heard about HOAs.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By MarkT11 on 10/22/2019 11:24 AM
What I posted was correct. Leave it to a former HOA president to slam my post. If you have owned your home for a period of time and then an HOA forms around you, you are not required to join the HOA and the association cannot force you to join. The HOA is legally, out of luck.

HOAs are required by state law, it doesn't matter what state you are in, that for every residential home that is in their association, they are required by law to provide a copy of the CC&R with that property. Going off that, HOA's are required to present a copy of the CC&R prior to signing on to purchase the home. HOAs are required by law to present these. HOAs who do not have the proper paperback deeming them a legal HOA, cannot force someone to join. There are instances where illegal HOAs were sued by the entire community for illegally collecting fees when the HOA wasn't registered with the state they were in.

There is no getting around this. I've been looking into this since the early 1990's when I first heard about HOAs.

I'm with you on the fact that I would try to avoid HOAs in the future, but did live in one for over 20 years and served time on the board. Can you provide a statute number or any reference for the bolded section above? In most cases the association is not a party to the sale, is not invited to closing, and is not provided buyer contact info prior to closing, so there is no way they could proactively provide the CCRs or require them to be signed. Some states might require disclosure, but that is the responsibility of the closing agent, not the association. In most jurisdictions CCRs are public records recorded with the county, the title company or other closing agent should be able to get them via that method in any case.

An HOA can exist without being incorporated. In my experience the HOA is formed by the CCRs, the corporation, if any, by the articles of incorporation.

Here is an example from my prior HOA's CCRs:
ESTABLISHMENT OF HOMEOWNERS" ASSOCIATION OF XXX, INC.. There shall be established a homeowners'
association, hereinafter sometimes referred to as Association, composed of record owners of each lot. The Association shall be
the XXX HOMEOWNERS ASSOCIATION, INC., organized and existing under the laws of the State of Florida. The
Association shall administer the operation and maintenance of the common areas and property of XXX and other duties
hereafter provided for. The Association shall have all the powers and duties set forth in this Declaration and in the
Articles of Incorporation and By-Laws and as granted by the laws of the State of Florida to non-profit corporations.

If the CCRs create an association, that association exists even if it becomes inactive and can be re-activated at a later time, the CCRs are still binding if the association is not active. I agree with you that if the CCRs do not create an association, one can not be forced on owners after the fact.

Escaped former treasurer and director of a self managed association.

MarkW18
Posts: 1,290

Posted:

Douglas,

Do you want one for Michigan or any state will do?

MarkW18
Posts: 1,290

Posted:

Here is what is for the developer in Michigan when selling a property:

559.184a Providing copies of listed documents to prospective purchaser of condominium unit; amendment to purchase agreement and condominium documents; signature on form as evidence; providing prospective purchaser of business condominium unit copy of recorded master deed; misleading statements; violation.

Sec. 84a.

(1) The developer shall provide copies of all of the following documents to a prospective purchaser of a condominium unit, other than a business condominium unit:

(a) The recorded master deed.

(b) A copy of a purchase agreement that conforms with section 84, and that is in a form in which the purchaser may sign the agreement, together with a copy of the escrow agreement.

(c) A condominium buyer’s handbook. The handbook shall contain, in a prominent location and in boldface type, the name, telephone number, and address of the person designated by the administrator to respond to complaints. The handbook shall contain a listing of the available remedies as provided in section 145.

(d) A disclosure statement relating to the project containing all of the following:

(i) An explanation of the association of co-owners’ possible liability pursuant to section 58.

(ii) The names, addresses, and previous experience with condominium projects of each developer and any management agency, real estate broker, residential builder, and residential maintenance and alteration contractor.

(iii) A projected budget for the first year of operation of the association of co-owners.

(iv) An explanation of the escrow arrangement.

(v) Any express warranties undertaken by the developer, together with a statement that express warranties are not provided unless specifically stated.

(vi) If the condominium project is an expandable condominium project, an explanation of the contents of the master deed relating to the election to expand the project prescribed in section 32, and an explanation of the material consequences of expanding the project.

(vii) If the condominium project is a contractable condominium project, an explanation of the contents of the master deed relating to the election to contract the project prescribed in section 33, an explanation of the material consequences of contracting the project, and a statement that any structures or improvements proposed to be located in a contractable area need not be built.

(viii) If section 66(2)(j) is applicable, an identification of all structures and improvements labeled pursuant to section 66 “need not be built”.

(ix) If section 66(2)(j) is applicable, the extent to which financial arrangements have been provided for completion of all structures and improvements labeled pursuant to section 66 “must be built”.

(x) Other material information about the condominium project and the developer that the administrator requires by rule.

(e) If a project is a conversion condominium, the developer shall disclose the following additional information:

(i) A statement, if known, of the condition of the main components of the building, including the roofs; foundations; external and supporting walls; heating, cooling, mechanical ventilating, electrical, and plumbing systems; and structural components. If the condition of any of the components of the building listed in this subparagraph is unknown, the developer shall fully disclose that fact.

(ii) A list of any outstanding building code or other municipal regulation violations and the dates the premises were last inspected for compliance with building and housing codes.

(iii) The year or years of completion of construction of the building or buildings in the project.

(2) A purchase agreement may be amended by agreement of the purchaser and developer before or after the agreement is signed. An amendment to the purchase agreement does not afford the purchaser any right or time to withdraw in addition to that provided in section 84(2). An amendment to the condominium documents effected in the manner provided in the documents or provided by law does not afford the purchaser any right or time to withdraw in addition to that provided in section 84(2).

(3) At the time the purchaser receives the documents required in subsection (1) the developer shall provide a separate form that explains the provisions of this section. The signature of the purchaser upon this form is prima facie evidence that the documents required in subsection (1) were received and understood by the purchaser.

(4) Promptly after recording a master deed for a condominium project containing a business condominium unit, the developer shall provide to a prospective purchaser of a business condominium unit a copy of the recorded master deed for the project.

(5) With regard to any documents required under this section, a developer shall not make an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

(6) The developer promptly shall amend a document required under this section to reflect any material change or to correct any omission in the document.

(7) In addition to other liabilities and penalties, a developer who violates this section is subject to section 115.

MarkW18
Posts: 1,290

Posted:

Here is another, https://www.michigan.gov/documents/mshda/Condominium_HO_Agreement_420378_7.pdf

MarkW18
Posts: 1,290

Posted:

And another,

https://www.avvo.com/legal-guides/ugc/michigan-home-owners-associations-1

SheliaH (Indiana)
Posts: 6,964

Posted:

This link has some fun facts on HOAs in the USA - https://ipropertymanagement.com/hoa-statistics
I Googled the numbers to show that there’s a good chance that many more people will wind up in HOAs at some point. As you can see all over this website, some are run fairly well (no one’s perfect, but the bumps are usually addressed), some are a complete shitshow and the rest are somewhere in between.
I was a first time homebuyer when I started learning about HOAs and thought they were a type of souped up neighborhood block club at first. I figured everyone would be interested in living in a clean, safe attractive community and doing the things that can help property values, like cleaning up after one’s pet and not keeping hooptie cars strewn all over the community. I’ve learned otherwise, especially after I joined the board and toiled for the next 10 years.
My tips on HOA living come down to this:
1. Decide if you want to live in an HOA at all and how much control you’re willing to give up. For me, I don’t like cookie cutter homes and would have a real problem with people nitpicking over the style and color of a fence or the trim of the house. I’m less concerned with the size of a dog, but more concerned about the amount of crap they poop. And I’d like to have nice neighbors – don’t hog the parking spaces or let your kids run wild all over the place and we’ll probably be cool.
2. Someone on this board once observed that some HOA communities are heaven to look at, but hell to live in, so once you’re done oohing and aahing over the granite countertop in the kitchen, the wine cellar and a home office, you might want to take a little walk around the community and talk up some of the neighbors. You may find some absolutely hate the board while others don’t have a clue about what’s going on and others are very involved (in a good way). Walking around can also give you a clue as to how responsible the board is – when you see the common areas falling apart, you need to find out why if you’re really interested in living there.
3. Inflation IS a thing and so are delinquencies – if I had to do it over, I’d definitely take a longer and harder look at the financials. You can take a look at the last five years of the budget (get the year-end information) to see if what numbers are going up. If you move in, you’ll be expected to pay assessments, so you may as well get a good idea on where and how the money’s being spent. In fact, ask the sellers about that and see how attention they’ve been paying to association issues (ignorance is not bliss, as we know all too well on this website).
4. While talking to the sellers, ask if those exterior improvements needed prior approval by the board and if they received it. I prefer something in writing because verbal statements – well, you know they aren’t always worth used toilet paper.
5. I’d still get a home inspector to look through the home – hopefully the sellers have at least taken steps to keep the place up. If not, I’d think twice.
6. The bylaws and CCRs may be recorded at a city or state agency – check there and if you can’t find anything, tell the seller you want to see those too. You can take a look to decide if you can live with those rules.

7. As others have noted, Michigan HOA law isn’t the same as Indiana, which is different from Florida, California and Maine, so knowing what state laws exist or not is always a good start. It doesn't matter what another state has because you aren't buying a home there, so you may want to check with the state attorney general’s office to see if they have something similar to the Michigan Condo book. w Maybe the local or state real estate commission or realtor’s organization might have something. Or you could try Googling it - since most of us here aren't attorneys, you may need to ask a private attorney (who should probably review the paperwork before you sign anyway - bring him/her to the closing).

DO ALL THIS STUFF BEFORE YOU BUY!!!! For those of you who think “don’t be silly, no one’s going to do all that,” I don’t disagree, but I also remember taking some first time homebuyer classes before I started looking in earnest and have found no one will ever care about your home the way you do. In my case, I’m a single woman with no kids and this is the most expensive thing I’ve ever purchased – damned right I’m going to do what’s necessary to make sure I can afford it and know what I’m getting myself into. If everyone else wants to buy a house the way they buy groceries, only to find out there is a HOA with a do nothing board and apathetic homeowners (who are also trying to sell and get the hell out), have at it.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By MarkW18 on 10/22/2019 1:15 PM
Douglas,

Do you want one for Michigan or any state will do?

Maybe I'm reading too much into the OP, but my take was that he was saying associations had to proactively provide CCRs to buyers and I wanted to see where that was stated. Per your first citation, the developer certainly has the relevant information and can do that, and should be required. After turnover, that gets more difficult. In Florida associations must provide dues status (estoppel letter or certificate) on request, and most closing agents will find the association and request same, but as far as I know there is no requirement that the association be contacted or informed before a sale takes place. If a private sale were to take place without using a professional closing agent, the association might never be notified of the sale. Certainly the association should provide documents on request, and closing agents should attempt to get those docs and provide them to the buyers, I'm sure some states have those requirements.

In the case where there is no active association, the CCRs still exist and a closing agent should be able to find them. In the case of a sale with no closing agent, that could easily be missed. Either way the dormant association could potentially be re-activated.

Escaped former treasurer and director of a self managed association.

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By DouglasK1 on 10/22/2019 2:18 PM

Posted By MarkW18 on 10/22/2019 1:15 PM
Douglas,

Do you want one for Michigan or any state will do?

Seems to me, a really s***** way of doing business.

KerryL1 (California)
Posts: 14,550

Posted:

In CA, there's a looooong list of what the seller (not the HOA) must provide before the transfer of title. Below is a tiny sample. The seller's agent probably gathers the documents from the HOA or property manager; nonetheless, no one has to go to the county courthouse. We have our CC&Rs on the Home page of our website.

Civil Code §4525. Disclosure to Prospective Purchaser.

(a) The owner of a separate interest shall provide the following documents to a prospective purchaser of the separate interest, as soon as practicable before the transfer of title or the execution of a real property sales contract, as defined in Section 2985:

(1) A copy of all governing documents. If the association is not incorporated, this shall include a statement in writing from an authorized representative of the association that the association is not incorporated.

KerryL1 (California)
Posts: 14,550

Posted:

MarkW18
Posts: 1,290

Posted:

It appears the association has to provide the documents that a seller requests with a specified period of time. This, I believe, is done through a escrow or title company.

Seller Duty to Disclose. The association is not a party to the transaction between buyer and seller and has no duty to make disclosures to the buyer--that duty falls to the seller. (Ostayan v. Nordhoff; Kovich v. Paseo Del Mar.) Realtors, as agents of sellers, cannot mislead buyers about the association and must fully disclose to buyers that they are buying into a deed restricted community with rules and regulations.

Deadline for Production. Upon written request, the association shall, within ten days of the mailing or delivery of the request, provide the owner of a separate interest, or any other recipient authorized by the owner, with a copy of the requested documents. (Civ. Code §4530.)

Costs & Fees. As required by Civil Code §4530, prior to the close of escrow sellers must provide buyers with ten different categories of documents. (Civ. Code §4525.) By statute, it is the responsibility of the seller to pay those costs. (Civ. Code §4530(b)(8).) Associations may pay a person or entity to assemble the documents on behalf of the association. (Civ. Code §4530.) Associations are allowed to collect a reasonable fee (including those charged by a management company) based on their actual costs but are prohibited from charging additional fees for electronic delivery of documents. Delivery of the documents may not be withheld for any reason nor subject to any condition except the payment of the fee. (Civ. Code §4530.) The document costs may or may not be in an association's transfer fees.

Statutory Form. As provided for in Civil Code §4530, associations must fill out a form showing the documents being submitted pursuant to Section 4528 and an estimated cost for those records.

Fine for Willful Violation. There is a $500 fine for anyone who willfully violates the disclosure requirement. In addition, in an action to enforce this liability, the prevailing party shall be awarded reasonable attorneys' fees. (Civ. Code §4540.)

Estoppel Certificate. Submission of an estoppel certificate may also be required.

KerryL1 (California)
Posts: 14,550

Posted:

Yes, in CA MarkW. The Association doesn't provide the docs to the prospective buyer, only to the owner (seller) who then supplies them to any recipient owner authorizes. Our MC has a dept. that handles all of this and it does charge seller per statute.

I might be missing the point in your reply MarkW?

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By KerryL1 on 10/22/2019 3:29 PM
Yes, in CA MarkW. The Association doesn't provide the docs to the prospective buyer, only to the owner (seller) who then supplies them to any recipient owner authorizes. Our MC has a dept. that handles all of this and it does charge seller per statute.

I might be missing the point in your reply MarkW?

It was just a follow-up to your post.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By MarkT11 on 10/22/2019 11:24 AM

What I posted was correct.

MarkT,

Some of what you posted simply is not correct.
This is mainly due to the terminology you used (as I tried to demonstrate in my initial reply).

The spirit of what you posted is correct.
Buyers should use whatever tools are available to see if they can or can not comply with the terms of the contract they are signing when they purchase.

Some States are being proactive to make sure that this information is provided.
Other States are slowly moving in that same direction.

When I purchased my first home, I knew nothing about HOAs.
Having had issues with the HOA, having served on the board and committees of the HOA and seeing how, regardless of what procedures are in place, things can start moving back down the wrong road, I was very concerned buying into another HOA. In fact, I removed offers when I found out information I never knew to ask for the first time I purchased.

Therefore, I commend you for trying to educate others.

I hope we have been able to educate you a little as well so you may better educate others.

Tim

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I think others have sufficiently back up the point that HOA's are NOT responsible for providing CC&R's, Articles of Incorporation documents to potential buyers. Again those documents are considered PUBLIC documents. They are kept on file at the County and State levels. The HOA itself doesn't keep a copy. The owners do. The owners make up the HOA.

Real Estate agents are not created equal. I've seen houses in my own HOA that do not have HOA lines checked nor list the dues amount. They certainly do not provide any details of the HOA. They aren't members of the HOA. It doesn't mean they aren't aware of a HOA's existence. They aren't responsible for providing the documents or financial dat of the HOA.

I know it's going to come down to "Ex-President" is picking on me... It usually does. However, if you read the other poster's post you see there is a lot of information that should provide some additional education on HOA's. Each HOA and state varies. I can only tell you in my HOA we were NOT responsible for providing buyers documents. Financial information was just for owners. There was NO "signing" of CC&R's or other documents to "join" the HOA. You were a member by virtue of being a homeowner.

Former HOA President

MarkW18
Posts: 1,290

Posted:

You're right Melissa, HOA's don't provide documentation to buyers, they provide to the sellers, who in turn provide to the buyers.

Actually, it would be pretty stupid for an HOA not to have copies of their documents, if not irresponsible. Actually, real estate agents have, or their brokers have, access to title reports which will show information on the property, including the name of the name, as it was provided on PUD or Condo rider document. They would also know, by obtaining the information from the Secretary of State, the agent's name and address for the association. Financial information in many states, is required to be given to prospective buyers. They would get this from the sellers, who, wait for it, the association. Why shouldn't a buyer know actually what the hell they are getting themselves into.

Your association, was just as you mentioned, your association. Others do things differently and hopefully a little more transparent like.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The Realtor doesn't necessarily do what you suggest they should "Know". Much of this same information is also available to potential buyers without going through anyone else. That is why the documents/information is PUBLIC. It is viewed as the "buyers responsibility to be informed". Whether that is a Realtor, Title company, HOA, lawyer, or Seller is what is up for debate. I don't believe it's any of them but the buyer.

What about sales that don't use a Realtor? People buy houses via bank or tax foreclosures. They may pay straight cash for the home. For sale by owner where there is not a Realtor involved. These scenarios have to be subject to having access to the same information about a HOA's existence. How would this be done if the CC&R's and Articles were not Public documents on file at a Public accessible resource?

Is it a perfect system? Heck no. I learned about HOA's when bought my 1st house in one. Had no idea you were responsible for such research or documentation prior. I even had a "Buyer's agent". Whom did tell me I was buying into a HOA but no details such as rules/documentation. It frankly wasn't their responsibility to do so unless I asked to do it. The documents were handed to me the day of closing.

I have been to a few home closings. So to say a HOA doesn't go to a closing isn't quite accurate. No we do NOT know when houses exchange hands and gets new buyers necessarily. It depended on the type of loan if it involved a HUD/PUD form if we (HOA) was involved at closing. I would have to sign off on the form. A few buyers on occasion would ask questions which could effect a sale from going through. That was a bit awkward when they found some of our rules not to their liking cancelling the sale. The seller's would be very mad. That could set the HOA up for a possible lawsuit for interfering with a sale don't you think?

It's not about being "transparent". It's about being an informed buyer and taking the responsibility to be informed.

Former HOA President

MarkW18
Posts: 1,290

Posted:

That response is about as clueless as they come!

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Yep. Sure is. You nailed it.

Former HOA President

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You can buy and sell a home without a Realtor. There is no laws I know of that forces you to hire one. So if you do NOT hire a Realtor who do you now blame for not being informed?

If you pay straight cash for a house that is for sale by owner, does that owner live in a state it's a requirement to turn over HOA documents? Not every state makes that mandatory. Buy a house at a bank foreclosure? That again is the buyer's responsibility to be informed of the PUBLIC documents on file at the courthouse.

It is NOT an excuse to not be in a HOA or pay dues because you did not get a copy of the CC&R's/Articles of Incorporation. By-laws may or may not be on file with the CC&R's. (By-laws not required to be filed in many states). The By-laws are arguably the ONLY document the HOA should provide a new owner. Financials to actual members upon request or attendance of a meeting.

You can wish and assume all you want about HOA's. Doesn't make it accurate, true, or a good way of doing things... Now can I have me clue back? I might know a few realities than clues...

Former HOA President

MarkW18
Posts: 1,290

Posted:

Keep digging, you're ALMOST there.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By MarkT11 on 10/22/2019 11:24 AM
HOAs are required by state law, it doesn't matter what state you are in, that for every residential home that is in their association, they are required by law to provide a copy of the CC&R with that property.

This isn't true in Florida. It's up to the buyer to be aware of the CC&Rs. That's why they're recorded in the county's official public records. It doesn't matter if a new owner is aware of the CC&Rs or the rules & regulations. They're bound by them. Your research abilities leave a lot to be desired.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By GenoS on 10/23/2019 2:26 PM

This isn't true in Florida. It's up to the buyer to be aware of the CC&Rs. That's why they're recorded in the county's official public records.

Recorded deed restrictions work the same way in all states.

Sikubali jukumu. Read all posts at your own risk.

MarkW18
Posts: 1,290

Posted:

Geno,

Are you saying that the seller has no responsibility in the process.

KerryL1 (California)
Posts: 14,550

Posted:

I'm wondering the same thing re: Geno & FL, Mark W.

Does seller have no obligation to disclose the governing documents prior to the transfer of title? And also no obligation to disclose anything else?

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By MarkW18 on 10/23/2019 3:05 PM
Geno,

Are you saying that the seller has no responsibility in the process.

Correct. The FL condo statute, FS 718.503(2) provides...

"Each unit owner who is not a developer as defined by this chapter shall comply with the provisions of this subsection prior to the sale of his or her unit. Each prospective purchaser who has entered into a contract for the purchase of a condominium unit is entitled, at the seller’s expense, to a current copy of the declaration of condominium, articles of incorporation of the association, bylaws and rules of the association, financial information required by s. 718.111, and the document entitled “Frequently Asked Questions and Answers” required by s. 718.504."

That's the Condo statute, FS 718. The Homeowners Association statute, FS 720, doesn't have anything even remotely similar. A good realtor will make the prospective buyer aware of the covenants and restrictions, but that doesn't always happen.

There is a requirement in FS 720 for the seller to provide a prospective buyer a "Disclosure Summary" before a sale/purchase contract is executed. It's a 1-page boilerplate disclosure that contains things like:

You're buying into an HOA and you will be required to be a member.
You're liable for assessments, which are currently _____.
You may be liable for future Special Assessments.
If you don't pay, a lien may be placed on your home.
As a prospective purchaser you should refer to the covenants and association governing documents before purchasing property.
These documents are matters of public record and can be obtained from the record office in the county where the property is located.
These statements are only summary in nature.

Again, a good real estate pro or the title insurance company will see to it that a buyer gets a Disclosure Summary and copies of the applicable documents, but sometimes it doesn't happen. The buyer's remedy if he doesn't get a Disclosure Summary is the ability to walk away without any penalty up to the date of closing.

Under Florida law the new owner of a condo unit or a home subject to an HOA has constructive notice of all of the governing documents of the association and even though the owner may not have actual notice (hasn't read the documents), the law says the owner must follow all the rules, regulations, and obligations contained therein.

MarkW18
Posts: 1,290

Posted:

GREAT, now where do you think the seller is going to get all the paperwork to proceed with a sale?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The courthouse or from the State. Since those documents are PUBLIC and accessible to anyone. They also can ask the HOA they are members of for a copy of the by-laws. It is their responsibility to provide, then they should have the documents or find them to give. It may cost money for copies. They wouldn't necessarily free but free to access.

Former HOA President

MarkW18
Posts: 1,290

Posted:

There are a couple of links below that show what documents and disclosures that a state like California would require to complete an escrow. Not sure what the consequences might be if someone doesn't comply.

There are a couple of resale document companies that MC, attorneys and smart self managed associations utilize. They are CondoCerts, HomeWiseDocs, ResaleReady. Unfortunately, a few here don't know what goes on outside their small communities.

Closing processes in the United States are handled by escrow companies, title companies and attorneys.

https://www.davis-stirling.com/HOME/Statutes/Civil-Code-4528#axzz2CR2ljirY

https://www.davis-stirling.com/HOME/Statutes/Civil-Code-4525#axzz2CR2ljirY

CD6 (Texas)
Posts: 34

Posted:

Every document in the op's post is readily available on our HOA website
and is included in the Resale Certificate package (payable in advance only)that is requested by the realtor here in Texas.

Anyone can see them, buyers, sellers, prospective buyers and realtors.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By MarkW18 on 10/23/2019 11:23 PM
GREAT, now where do you think the seller is going to get all the paperwork to proceed with a sale?

The seller can ask the HOA for copies of the governing documents, the recent financial statements, and a current Disclosure Summary. Usually the seller's RE agent will call to obtain an Estoppel Certificate which, in Florida, spells out any outstanding moneys owed to the association along with a list of any open violations on the property. The buyer is entitled to rely on that information for 30 days.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By CD6 on 10/24/2019 12:59 PM
Every document in the op's post is readily available on our HOA website
and is included in the Resale Certificate package (payable in advance only)that is requested by the realtor here in Texas.

Anyone can see them, buyers, sellers, prospective buyers and realtors.

Ideally, that's the way it should work.

MarkW18
Posts: 1,290

Posted:

Quote:

Posted By GenoS on 10/24/2019 1:06 PM

Posted By MarkW18 on 10/23/2019 11:23 PM
GREAT, now where do you think the seller is going to get all the paperwork to proceed with a sale?

It's hopeless.

DennisR11 (Florida)
Posts: 1

Posted:

Last I knew, there’s actually a line on the HUD form signed at closing that the buyer has actually received information about an HOA. Most folks don’t even know they signed it, as so many signatures are required.

MarkW18
Posts: 1,290

Posted:

The form they may have signed is either a Condo Rider or a PUD rider, which is put out by either Fannie Mae, Freddie Mac or HUD.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

I'm thinking MarkT11 just got everyone going.

Frankly, rarely is anyone correct when they state emphatically they are correct.

In my opinion, MarkT11 is correct about the generally simple things mentioned, but wrong about most of the others.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By GeorgeS21 on 10/31/2019 2:29 PM

Frankly, rarely is anyone correct when they state emphatically they are correct.

This site could use a big green check mark thingy.

JamesS38 (Alabama)
Posts: 11

Posted:

Maybe we just post what we did in our HOA and just forget whether it was right or wrong or if it followed individual state statues.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

James I don't know what is wrong with you. Seriously how is someone supposed to post every single rule/law in your state or your HOA to satisfy you for a "right/wrong" answer? We are NOT responsible for spoon feeding anyone information. It is still YOUR responsibility to make sure the advice will fit your situation. We are just here to give FREE advice and help guide you into a direction that may be helpful.

We got it. I am "ignorant" and don't know what I am talking about yada yada. Can you now actually start CONTRIBUTING to something POSITIVE instead of tearing others down? (Richard).

Former HOA President

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