Undisclosed HOA

We purchased a vacant piece of land with the intentions on building a house. The land was listed with an agent as a “residential building lot.” We purchased with an agent through the same real estate company to which the land was being sold. We did a title search, had a survey, and did a perc test, all as contingency’s for purchasing. All went well and we bought the land. The owner never disclosed it was part of an HOA or that there were restrictions/covenants in place. He in fact checked NO to those questions on the disclosure form. Never once was an HOA mentioned to us before or during closing. That was in 2018. Fast forward to This past October, ready to close on our construction loan and the title company for it, found a non-building clause on our land. At that time, we had to do an amendment to the plat and have the new plat re recorded as a building lot with the county. We were successful with doing so as the reason it was non buildable was because it wasn’t perc tested. Which we did in 2018. Now, closing on our new construction loan this Wednesday, and a neighbor (with in the HOA we are believed to be apart of) is perusing suing us to keep us from building there. HELP!!

KatieH3, as TimB4, indicated, you should certainly set up a meeting with a real estate attorney. In preparation for this meeting:

-- Obtain a copy of any covenants/restrictions recorded with the county for your land. Be aware that courts generally rule that covenants/restrictions recorded with the county are considered proper notice of said covenants/restrictions.

-- Find exactly where in the covenants/restrictions a HOA is required. If you can, quote the sections here or attach a link to the documents, with identifying information redacted. This forum does not allow identification of actual HOAs.

-- Look up the HOA at the Pennsylvania Secretary of State site, corporations section. If possible, obtain a copy of the Articles of incorporation. I would love to hear back from you about whether an incorporated HOA actually has some kind of control over your land.

-- To be clear, as I am not quite sure where you are with your research: Keep in mind that the existence of a HOA is different from the existence of covenants and restrictions. Covenants and restrictions can exist without a HOA being present. Neighbors can enforce covenants and restrictions, regardless of whether a HOA exists.

-- Did the amendment of the plat require review by municipal or county authorities? I am betting it did. I think this is in your favor.

-- The Pennsylvania Uniform Planned Community Act may or may not be relevant here. See https://www.parealtors.org/wp-content/uploads/2016/06/UniformPlannedCommunityAct.pdf , especially section 5402 and 5407. Or at least ask the attorney about these.

-- Great, re the attorney's counsel. May I ask: How much did the attorney cost you?

-- I think there is a strong argument for doing nothing with the neighbor until his/her attorney starts sending demand letters. I do mean not responding in any way, shape or form. If the neighbor hires an attorney, then you all should turn over any demand letters to your attorney and see what your attorney says to the claims in the demand letters.

I agree with Tim that you should contact an attorney. There are just too many questions that need to be answered by a professional.

I respectfully disagree with delaying. It is possible that all the legal fees your neighbor is accumulating will someday be yours if a judge rules against you. Also, there's probably a time limit on seeking a remedy from your title company.

Their attorney has not filed this “stay order” you mentioned, yet. Our attorney advised us that in order for them to file an injunction, each member of HOA would need to pay double the cost to build at 10%. That means each family (there are 6-7) would need to put up $150k. From what it seems, only one neighbor really cares about us building there, and of course he is the president of the HOA and the MOUTHPIECE. I don’t see this happening, but I worry that his attorney will find a loophole somewhere. I also worry that he will file things just to drain us financially and waste our time. But, yes, from what we are being told and what we understand, we have done everything right.

Exactly John. Either way, we feel screwed. We’re so excited to start building but have this worry looming over us.

You're saying the cost of building the home is something like $750,000? And the law in Pennsylvania to stay construction requires the plaintiff (for a stay order) to put up this $150k?

Ya know, in my opinion from afar and lacking a copy of the HOA's governing documents, I would not be so hard on the HOA just yet. Covenants are contractual terms. If the covenants for your land were properly recorded with the county, you are bound by them. Did the municipal/county planning committee goof? I do not know.

I understand your attorney indicates you are legally in the clear. Yet an HOA does appear to exist. It has an attorney. Those covenants may very well say something about this situation to justify the HOA's ire.

I try to take only the side of the law. And I am just not 100% clear on the law here. Hopefully your attorney is.

I do think you all need to stay sugary sweet polite to the HOA people, for a few practical reasons. This does not mean cave to them. It means pursuing the facts of the situation. Granted at some expense to both sides by way of attorney fees.

I appreciate your sharing all this.

Does anyone know the law regarding this in PA?

Some chatter on Pennsylvania HOA disclosure requirements, referencing of course the aforementioned Section 5407: https://blog.acrirlty.com/hoa-property-management-services/why-you-need-to-purchase-homeowner-association-resale-documents/

See Section 5407 at https://www.legis.state.pa.us/cfdocs/legis/LI/consCheck.cfm?txtType=HTM&ttl=68&div=0&chpt=54&sctn=7&subsctn=0

But first, I am just not clear a HOA actually exists though. Second, the queries I suggested above remain unanswered. And third, it's curious that the seller said one did not exist, yet there seem to be neighbors saying otherwise. Voluntary HOA?

OP, ya gotta go get a copy of the Declaration (if it exists) and seek Articles of Incorporation (if they exist).

I would hope the real estate attorney is thinking about these aspects as well. From across the anonymity of the internet, yet with a lot of experience with HOA/condo law, I do not know.

Katie

All you can do now is wait for the HOA attorney to get back to your attorney as promised.

So where was this non-building clause found? Typically they are found in title searches. Why was it missed the first time?

You may have a good case for a claim against the seller and the first title search company.