Can a property manager notify prospective homebuyer of violation?

Started by MichaelT21 • 12 replies • 357 views

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MichaelT21 (Arkansas)
Posts: 200

Posted:

If there is an open violation, can a property manager notify a prospective homebuyer that the property has an existing violation?

Say the house is painted purple, which is against the rules of the Association, and the current homeowner decided to sell without repainting. Can the Board/Property Manager notify the prospective new homeowner that the house is painted an unapproved color and will need to be corrected, prior to the sale going through?

JohnS111 (New York)
Posts: 228

Posted:

Quote:

Posted By MichaelT21 on 03/05/2023 4:17 PM
If there is an open violation, can a property manager notify a prospective homebuyer that the property has an existing violation?

Say the house is painted purple, which is against the rules of the Association, and the current homeowner decided to sell without repainting. Can the Board/Property Manager notify the prospective new homeowner that the house is painted an unapproved color and will need to be corrected, prior to the sale going through?

Only if the property manager wants a potential tortious interference with contract claim. I'd route all communications to the existing owner. It's his/her problem anyway.

DouglasK1 (Florida)
Posts: 2,046

Posted:

During my time on the board, for every sale the closing agent sent an estoppel request that asked about a variety of things including current payment status, and outstanding violations. Maybe that's just a Florida thing, but hopefully it's more widespread than that. I would provide the info if requested, but not proactively try to contact the buyer or their agent.

Escaped former treasurer and director of a self managed association.

WendyM5 (North Carolina)
Posts: 1,522

Posted:

NC law requires hoa to notify potential buyer of several disclosures including. blhoa issues
So yes in my state

vis ta vie

LetA (Nevada)
Posts: 2,679

Posted:

Yes it's called disclosure.

SheliaH (Indiana)
Posts: 6,964

Posted:

We have a disclosure law in our state, so you should check yours.

That said, I agree with Douglas it's inappropriate for the association to step in a potential sale this way. I think you can write the current homeowner and remind him/her of the violation and to fix it, otherwise the association will take further action. Leave it at that - if you have to send another notice after the sale, consider that the first notice.

If the homeowner protests, then you can advise him or her that notices were sent before they moved in. If they want copies, provide them. What happens after that is between the current and former owners, but as far as the board is concerned there's a violation that must be fixed by someone.

You might also consider publishing something to this effect in your newsletter and website so everyone knows to address thus before they sell. If there's a state law on disclosure, tell them that.

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

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By JohnS111 on 03/05/2023 5:00 PM

Only if the property manager wants a potential tortious interference with contract claim. I'd route all communications to the existing owner. It's his/her problem anyway.

I agree.

BillH10 (Texas)
Posts: 1,217

Posted:

We have a disclosure requirement in Texas, any out of compliance situation is to be noted on the Resale Certificate, which is provided to the buyer, generally through the title company.

It has been my experience the title company will not allow the sale to close if there is a compliance issue until:

1. The seller has cleared the compliance issue and the HOA (through the management company) signs off that the issue has been addressed

2. Some other arrangement acceptable to the HOA has been made. Although I have not seen this process used in Texas, when I lived in California it was quite common for a sum of money to be deposited in escrow by the seller for the use of the buyer in rectifying an issue after the sale had closed.

As the MC, I would not proactively notify a buyer or buyer's agent of an out of compliance issue on a property. If asked, I would refer the person asking to the seller's agent. If a misrepresentation takes place, we are not involved.

Sometimes, on mortgage applications there is a question regarding the presence of an out of compliance issue on the property. Our response is yes if there is. If there are subsequent questions, again we refer the person asking to the seller's agent.

MaxB4
Posts: 3,513

Posted:

The question as to any compliance violations and or fines is part of the disclosure process for all California escrows.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By MaxB4 on 03/06/2023 9:57 AM
The question as to any compliance violations and or fines is part of the disclosure process for all California escrows.

It's also part of the process in Virginia.

It appears to be done in Washington State as well.

See: Don’t Forget! Disclose Those HOA Documents As Part of Your Home Sale

If you scroll down about halfway you will find the following:

"Your standing with the HOA will also be reported within the disclosures. If your home is not in compliance with the association’s CCRs, the new homeowners need to know—especially if it’s going to cost them down the line."

BillH10 (Texas)
Posts: 1,217

Posted:

Thanks Max, I had forgotten about any sums owed to the Association by the seller.

Those too must be noted on the Resale Certificate. The instructions issued to the title company state the amounts due are to be collected from the seller's proceeds of sale and are to be remitted to the Association.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

This tricky. The question is does your Property Management company handle such paperwork within their contract? We had a recent discussion with another poster who was upset at their HOA for charging X amount of money for doing "sales" contract work. Basically handling the paperwork for the HOA for creating a HOA account and producing certain required paperwork. Is this something your PM knows about and is it contracted to be part of their job?

Otherwise, I feel it is on the HOA to provide proper notice of violations to current owners or under contract buyers (If contacted). When I was contacted for filling out the PUD paperwork I may mention it to whomever contacted me. That is usually the loan company that is working with the Realtor.

One time we had a question about who is responsible for the sidewalks/driveway. Had to tell them that the HOA is NOT responsible per the rules. This delayed the sale or may have even cancelled the sale because the potential buyer did not like the answer.

It can be tricky when someone who doesn't do their research prior to buying. I think should be the buyer to ask the questions. If they don't or their Realtor (buyer's agent), doesn't ask then can't really blame anyone but themselves for not doing their due diligence.

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MelissaP1 on 03/06/2023 1:10 PM
This tricky. The question is does your Property Management company handle such paperwork within their contract? We had a recent discussion with another poster who was upset at their HOA for charging X amount of money for doing "sales" contract work. Basically handling the paperwork for the HOA for creating a HOA account and producing certain required paperwork. Is this something your PM knows about and is it contracted to be part of their job?

Otherwise, I feel it is on the HOA to provide proper notice of violations to current owners or under contract buyers (If contacted). When I was contacted for filling out the PUD paperwork I may mention it to whomever contacted me. That is usually the loan company that is working with the Realtor.

One time we had a question about who is responsible for the sidewalks/driveway. Had to tell them that the HOA is NOT responsible per the rules. This delayed the sale or may have even cancelled the sale because the potential buyer did not like the answer.

It can be tricky when someone who doesn't do their research prior to buying. I think should be the buyer to ask the questions. If they don't or their Realtor (buyer's agent), doesn't ask then can't really blame anyone but themselves for not doing their due diligence.

I contacting the buyer, even if under contract, bordering on tortious interference?

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