No Disclosure Packet Obtained

Started by TerryS • 16 replies • 764 views

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TerryS (Virginia)
Posts: 22

Posted:

I am on the Board of our POA and we just recently became aware that two lots (without houses) were sold last year without any requests for Disclosure Packets. The previous owner had died and we never received any correspondence from his heirs, etc. The only reason we even found out was that our dues invoice had been sent to the address we have on record (of the previous owner) and someone forwarded them to the new owners (there were two separate buyers). We assume whoever took care of the closing, etc. either did not know or totally ignored the regulations regarding POA's and Disclosure Packets. Can we charge the new owners for a packet or do we just have to eat the cost? And if they won't pay, is there anything we can do? Thanks!

SheliaH (Indiana)
Posts: 6,964

Posted:

I would think you'd best of with the previous owner, but now that he or she is out of the picture, there may not be much you can do about him or her. I think the previous owner should be responsible for disclosing that the property is in a HOA, but if you read the conversations on this website, you know this isn't at all unusual.

At this point, it's more important for you to get the new owners up to speed on their rights and responsibilities as HOA members, so send the the packet and ask them to review and turn on whatever documents they should be aware of. surely this won't break your budget.

If they are shocked and dismayed at finding out they've in a HOA and weren't told , they need to take that up with the previous owner. It may also be a good idea to remind all go downers if their obligations in this area.

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

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Many times disclosure packages are provided for mortgage purposes ... if the properties changed hands because of death, or new owners paid cash, they may not have needed, nor wanted to pay for a disclosure package?

TerryS (Virginia)
Posts: 22

Posted:

Thanks guys! George, in VA per state law the packets are required except in a few situations (one is foreclosure) so not sure how they could say they didn't want one even if they did pay cash for the property.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By TerryS on 04/27/2020 5:43 AM
I am on the Board of our POA and we just recently became aware that two lots (without houses) were sold last year without any requests for Disclosure Packets. ... We assume whoever took care of the closing, etc. either did not know or totally ignored the regulations regarding POA's and Disclosure Packets.

First, Virginia law obligates the seller (not the HOA) to (1) request the disclosure packet from the HOA and (2) deliver the disclosure packet to the purchaser. Without the seller's request, the HOA has no obligation. If the disclosure packet is not provided, the sole remedy of the purchaser "is to cancel the contract prior to settlement." See https://law.lis.virginia.gov/vacodepopularnames/property-owners-association-act/

Quote:

Posted By TerryS on 04/27/2020 5:43 AM
I
Can we charge the new owners for a packet or do we just have to eat the cost? And if they won't pay, is there anything we can do? Thanks!

Without a request, your HOA had no obligation to do anything. Please explain: Why are you asking about whether the HOA can charge for something it did not do and is not legally obligated to do? (Or once you study the statute, does your question change?)

Else I agree with Shelia that sending the new owners the CC&Rs and rules and regulations, by certified mail, might be prudent.

KerryL1 (California)
Posts: 14,550

Posted:

I agree with Sheila & Augustin: "...sending the new owners the CC&Rs and rules and regulations, by certified mail, might be prudent."

It's only wise to give them full knowledge of your association--also helps avail further misunderstandings.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Terry

Aslo send a nice letter along the lines of welcoming them to the HOA and say we are lead to believe you did not get a copy of our Covenants, etc. so we are enclosing a copy for your reference. Also include the dues schedule and form of payments. Include anything else that could help them and ease them into the HOA.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Disclosure packages, per statute, are an issue between the sellers.
Per statute, when the current owner requests a package, the HOA must supply one.

The association did not receive a request - hence they are not obligated or required to provide a package.
Hence, there would be no charges incurred for a package.

The Association should only be concerned with collecting assessments and compliance with the governing docs (exterior changes, etc.).

The issue is between the sellers and buyers NOT the Association.

The Association may offer the new owners a copy of the documents for a cost.
the choice would be up to the owners.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Terry,

Yep - Virginia - just moved from there.

In our small, self-managed HOA (52 properties) we, for years provided disclosure packages, when requested - sometimes they were not as there was no mortgage and the properties had been purchased, cash as is. The HOA, accordingly, as pointed out by others here, was not involved.

When the internet made this a cost free exchange, I, as prez, started doing it free of charge. Later, when I left the Board, the Board voted to charge the maximum allowed by Virginia. This seems, on the surface, unnecessary since no cost was incurred - I always thought it a terrible way to welcome folks to the community.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

I guess I am at a loss. No matter the type purchase, I for one would always want a title search and should not that search turn up deed restrictions (Covenants)?

BillH10 (Texas)
Posts: 1,217

Posted:

GeorgeS21, I agree with your fundamental point that with the internet, the cost of document production is nil.

However, as the owner of a property management company we continue to charge the seller for the Resale Certificate Package as there are few property sale transactions which do not require sometimes up to 5 hours of our time on the telephone and email with the seller, buyer, agents on both sides, title company (escrow holder in Texas), the bank, property inspectors, etc.

In a few instances we have also charged the buyer at our hourly rate if the bank or finance company requests take up more than 20-30 minutes of our time.

TerryS (Virginia)
Posts: 22

Posted:

Thanks everyone for your input. After reading it, I just called our Sec/Treas and she told me that when she replied to the new owner about the dues, she did receive a response asking for our "manual" and asked me if she should charge them. Tim - I see where you said we could. I have spent many hours over the years as the president on our Board reading the state code regarding POA's, and this time could not find something that specifically addressed this. Our packet is not online and we are self-managed so there is a cost to prepare them. But I'm not hung up on it and could go either way - I just want to make sure whatever we do is legal. Appreciate all your opinions!

BillH10 (Texas)
Posts: 1,217

Posted:

John, I was wondering the same thing. How does one obtain title insurance without a title search?

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Some folks buy property, do their own search - some don't care as they might know the folks who sold to them - some will take a look at what the mortgage company/owner might provide from the last time a title search was done - and feel comfortable enough to just buy the property.

Terry - to your last post - "Our packet is not online and we are self-managed so there is a cost to prepare them." Are you saying there is a cost in addition to sending an email in response with the docs as enclosures, and noting whether the dues have been paid, etc? If you are self managed, I assume it is a relatively small community? Or, did you mean "...there is 'no' cost to ...?"

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By TerryS on 04/27/2020 12:07 PM
Our packet is not online and we are self-managed so there is a cost to prepare them.

As there should be, given the statutory requirements for a "disclosure packet" include specific, recent financial reports. AFAIC, a charge for the statutorily required disclosure packet, along the lines of what BillH10 posted, makes complete sense.

But here, if all the owner wants is the governing documents (CC&Rs, Rules and Regs, Articles of Incorporation, Bylaws), and the docs are in digital format, I hope they would be available for free through email or maybe for like (a well-advertised) $10, to encourage people to be responsible. Or downloadable through the HOA's web site (if said site exists).

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By TerryS on 04/27/2020 12:07 PM

I just called our Sec/Treas and she told me that when she replied to the new owner about the dues, she did receive a response asking for our "manual" and asked me if she should charge them. Tim - I see where you said we could. I have spent many hours over the years as the president on our Board reading the state code regarding POA's, and this time could not find something that specifically addressed this. Our packet is not online and we are self-managed so there is a cost to prepare them.

Terry,

In this instance, the cost would be for copies of documents.
This is allowed by statute.

See: § 55.1-1815 See Section E

If it's less expensive to put together an inspection package, do that.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Tim

For short money, a copy of the Covenants and a nice letter, they could nip any problem in the bud.

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