How are you notified of a closing in the neighborhood?

Hello. I am a Board member in an HOA that's relatively small and new. When a closing occurred between a new homeowner and the original developer, the law office would always notify us by mailing the annual assesment collected during closing. Now, we have homeowners selling their homes to a new round of homeowners, but no one is contacting us to confirm that the previous homeowner is paid up on all outstanding dues + fees. At least then we would know about a new homeowner and his/her/their name(s). Also, we could enforce payment of current year dues by the previous homeowner before or during closing.

How are the rest of you being notified about a closing in the neighborhood?

please advise.

Thank you, SusanW1, for your suggestion! I hadn't thought of contacting the companies, nor the owners when they put up for sale! But other than by driving around, how do you know of homes being put up for sale? is there a website I can search every month that lists all homes for sale?

In my subdivision, the title company calls the HOA Office Manager to check the state of the assessments. Often (not always), the listing agent will call to see what the assessments are. People selling their lots themselves - who knows what they do or do not do.

Frenny,

I don't know how home sales are conducted in GA, but here in AZ all realtors are aware that an HOA might be present in any given community. In fact, the listing always indicates whether or not there is an HOA. If there is an HOA the realtor, and also the title co agents, know the assn must be contacted to provide the required (by state law) disclosure documents. Normally the title agent will contact the HOA for this information. The only glitch in the system might occur if the property is a "for sale by owner". The members of the assn should be notified that if they are selling their property w/o a realtor they need to contact the BOD to ensure that all the required disclosure information is given to the buyer.

In Kentucky, for HOAs, the association is not a part of the sale transaction, nor do we have a seat at the closing table.

We are not always aware of properties changing hands and even actively monitoring the Property Valuation website and the weekly listing of residential title transfers in our local papers does not only NOT catch all the transfers, but often the transfer may not be listed for up to 6 weeks from the date of transaction.

Our assessments are due on January 1 of the year for which the assessments apply.

We will send out the notices to the title owner of record with the PV website as of Nov 15 of the year prior to the due date.

If a transfer has occurred, we often don't know until the dues become delinquent.

It is the responsibility of the seller to inform the buyer, and it should be the buyer's responsibility to ask the seller.

In fact, one of the gazillion papers the buyer initials at closing is one that pre-absolves the title search attorney for NOT informing the buyer of any liens or deed restrictions attached to the land.

I don't know if it holds up in court, but it's usually part of the closing packet.

Robert,

As I see it, in KY there must not be any (or not very much!) state regulation. No HOA disclosure laws requiring these documents to be transferred to the buyer. And no Real Estate requirements to show that an HOA is present on listings and to require R.E. agents to obtain this info. Also, the Title Companys should know if there is an HOA and make inquiry to the HOA asking if any monies are owed in arrears, etc. IMO, it all boils down to a laxity in state regulation.

Mary, you are correct. We have no HOA legislation that requires/compels the notice.

For what mention there is of it, as I said earlier, as long as the Title Attorney gets a sign-off from the buyer that there MAY be and HOA or deed restrictions, but they (the title search attorney) are not liable for non-disclosure, then they have their end covered.

It's basically the buyer's responsibility to check to be sure and the seller's responsibility to inform, unless the buyer signs that page that says, "may be one, but . . . . "

Marcia,
All well and good, but don't you think an effort or rule should be made to require each owner to inform the HOA of any change in ownership? You could also put some teeth in this with a fine and/or a restriction that notification has to be received a certain # of days before closing.

Just a wild scenerio. Suppose someone in Maryland sells this property to a pedophile or sexual predator. The association accepts the buyer after the fact of purchase. No attempt is made to vet the owner in any fashion. Is the association responsible? Probably not if they had some system in place that showed they did what they could to vet the purchaser. Granted there is little an association can do, but to just ignore the fact that a new owner has been accepted in the association appears to be trouble. The association is probably responsible for insuring a new owner is registered with the association. I know it is a double tough job with spread out HOA's but I am just suggesting a goodfaith concern can keep the HOA out of trouble.

Michele,
Now correct me if I am wrong. We are talking about Home Owners Association. By definition this means that only owners residing in a certain restricted area are allowed in the association. I suppose that is a given. Can you elect not to join the association? I doubt it, in most cases. As a member of the association you have to abide by the covenants, what ever those covenants say if you elect to buy the property. And most likely you can not claim you didn't know anything about an association, that is your responsibility and the sellers responsibility. There are neighborhoods that are very restrictive in who lives there, they can restrict your house size, material, bedrooms, on and on. So, lets be fair and stop indicating I am somewhere in left field. If your covenants declare you will notify your association when you have a contract on the house, you can require that. The seller agreed to restrictions when they bought the property, you veted them when they signed your CC&R.s. I am not saying your association has the authority to require these restrictions, I don't know. But if they are written there and you signed the agreement , you have to abide or pay the penalty, as spelled out in the documents. If you don't want this kind of an association, don't buy there, but you can't buy there and say, I don't want to belong. If these things are part of your documents the association has to make an effort to enforce them. If they are not there, you can't, but if your association wants this kind of control, and so far we are talking nothing but stipulations that keep the association from trouble, then change your documents.

Tell me, what does your association require out of its members? Are those requirements written in stone and were handed down from eons ago? No, they were written by lawyers to sell property, some like a lot of control, some want little control, but they all have requirement to belong to the association, no matter how minimal or how much ignored.......or enforced.

Robert,

The CCRs are real covenants and it is not necessary that the owner have actual knowledge of them. It doesn't matter whether you understand what the HOA is about or whether you have read the documents recorded against the property, you are responsible for knowing what the covenants contain. By virture of purchasing your property you are bound by the CCRs. A new owner is not being "forced" to pay assessments; it's his "obligation" to do so.

I think it's a real shame that some states do not have HOA statutes that require disclosure info to be provided to a potential buyer.

Robert, with all due respect, I feel you are playing word games with me.

We cannot and will not put such a "restriction" into our covenants, that everyone has to notify the HOA upon sale of their properties.

For one thing, if the owner decides to ignore it, how will we know until months and months after the sale?

At which point, how can we "fine" someone who is no longer part of the association?

"Members" of our association are defined in our CC&Rs. It is absurd, with all due respect again, to even think or DREAM that we would or could REQUIRE all sales to run through us for approval, thumbs up, thumbs down. . .

Yes, we are a "mandatory" association.

But Kentucky doesn't have HOA-specific legislation; most cases that end up in court are decided on contract or similar basis.

And, quite frankly, I don't care to take that ferret on.

Robert,

By saying the property owner does not have to have knowledge of the documents, really means that it is not a requirement for him to have agreed to the covenants or even to have received a copy of them. In other words, the property owner cannot refuse to pay the assessments or even abide by any of the restrictions by claiming that he did not agree to the restrictions or that he did not even know they existed. By acceptance of the deed he has agreed to abide by the restrictions. I think this is a tenet of property law.

What Robert says goes for us too here in Washington state. If there are any unpaid assessments on a property a lien is placed on the house, and the house cannot be sold until that is cleared. Period.

The more problematic scenario is the seller who is paid up, but doesn't tell the buyer that they are in a restrictive community. For some buyers this is not a selling point and could botch the deal. One of our homeowners did not know there were CC&R's until closing, when the title agent said, "Well, your dues are all paid up so that's good!" Surprise. Now, we only have 41 houses and it's a pretty entrenched neighborhood, so anytime a For Sale sign goes up, why our hearts go all a' flutter! So, what I do, is as soon as a For Sale sign goes up, I hand deliver a copy of our CC&R's and Bylaws to the Realtor. If it's a For Sale By-Owner sign, I hand-deliver copies to the homeowner to have "on hand" for their prospective buyers, you know, just as a less than subtle reminder of that annoying fact of DISCLOSURE! 'Cause that's just the kind of gal I am!

Dorothy

Michelle,
This is true. The final thing I do is wait a week after the new owner has moved in, and then hand-deliver a welcoming card and gift, introduce myself, get their name and contact info, and give them a copy of the CC&R's and Bylaws, saying, "I know how easy it is for these to get lost in all the paperwork. If you any questions or concerns about any of them please call me." I also make a note in my HOA book of the date and time and to whom they were delivered. If I haven't been able to reach anyone personally, I mail them U.S.P.S certified mail. I'm real big on documentation and covering as many bases as I can think of. I've yet to have anyone not know there were covenant by the time they moved in. I've had folks say they had not received them or read them but knew of them, which is completely bizarre to me, but hey, as we've learned with the sub-prime mess, many a' folk don't read the fine print.

Still, even in the case that a homeowner buys into an HOA without knowing it, by providing them with the governing documents immediately you have done what you can do. If the homeowner then choses to ignore the CC&R's that she didn't sign on for, it becomes like any other violation, which the HOA would be compelled to address. It won't be the HOA the homeowner could challenge. It would be the seller. Once in possession of the law, as was said previously, ignorance is no excuse.

Dorothy

Robert,

Right on, which is why I traipse on over to those new homeowners as quickly as their boxes are being untaped, or spend the big certified mail bucks to make sure they get all the governing documents, I cannot imagine a situation where the Association does not know who is paid up, nor of any Bylaws that are silent on collection.

I've heard truly disturbing stories of how some property management companies can work, and I do use the threat of them, as in losing control of your neighborhood, to strike fear into the lackadaisical hearts of my little community. So, for us, there will never be a situation where a homeowner does not know the CC&R's, nor immune from them and/or assessments. Everybody needs to be on the same page even if they can't read the book.

Although, here's one for the books. My friend's HOA in Colorado FINED him a $30 processing fee for paying his annual dues all at once! GASP! The nerve of him! They told him that their system was not set up to take "big" one-time checks, only monthly checks. Apparently they would rather take individual $25 checks from 70 homeowners every month. Imagine having $500 X 70 come in all at once, or even half. I say, "Show me the money!"

Dorothy

Michele,
The below was posted on the Link to the left on this page highlighted in Yellow.
This particular case helps to identify the relationship between owner and association.

Again, if it don't work for you or you belive differently, I'm fine with that but Dr.Phil says: there are two sides to every pancake.

South Carolina Community Association Law Blog

Again, with all due respect, Robert, I have no idea what you're talking about??

What are you referring to?

What does SC "community" association law have to do with Kentucky and HOAs?

At any rate, there really aren't two sides to this particular issue in our particular association (nor a myriad of others in Kentucky).

We have absolutely no way to mandate that we be informed of all closings.

We certainly have NO authority to "vet" new owners.

It's not what I believe or what works or doesn't work, it simply is not a statute that the HOA be notified of sales, transfers of titles, or closings.

If we need to update our records, we have to actively pursue that from open records that are available in our county, and we are at the mercy of how quickly they update those records.

Short of going door-to-door every year to over 300 individual homes and "demanding" to see the documents that show the name of the title holder, it just ain't gonna happen. Even then, that doesn't help us when we run into renters, who may or may not give us the contact information for their landlords.

Mary is absolutely correct. It must be done at the state level and there must be teeth in the laws -- at that level.

Putting it in our documents is futile. We would have no way to enforce that didn't far outweigh the costs of non-enforcement. That is, assuming that people would even agree to making it a restriction!

Dorothy,

You said: "Which is back to my point. Whether real estate transactions are protected by clear regulation or subject to the lax gods of the universe, YOU, as a Board member make sure you provide all new homeowners with the governing documents."

What you say is all very well and good; however, if the HOA has already provided the necessary documents to the title co agent (which is the procedure here), it's not necessary to provide them again to the new owner.

But, if they do not, and here in Kentucky it's very rare unless a title search turns up a lien, then it does not fall to the HOA to ensure the buyers are aware.

Dorothy, with 40 homes and a diligent person as you, that's all well and good to insert yourself into the scenario somehow.

But with over 300 homes spread over 15+ streets, that's simply not practical.

Now, if the homeowners want to provide volunteers to populate an HOA Welcome Committee, I'd be all for that. But in 12+ years here, we find people who step up to the plate to try that often disappear into the woodwork as soon as they get the mailing list.

Michele,
Yikes! Well, that is a horse of a different color. But you must know when you get a new homeowner right?

Dorothy

No. Why would we, unless the new homeowner moved in next door or within eyesight of a board member.

We don't "patrol" the neighborhood, nor should we.

We know there is a new homeowner when we update the assessment mailing list at the time the assessments are due to be mailed out.

We have 9 separate sections, each with its own set of CC&Rs. Most of the major restrictions are the same, but they do vary somewhat.

For those that are new, we enclose with the assessment bill a generic letter that provides a "reminder" to them who we are and what the CC&Rs are and how to contact us if they need a copy.

Michele,
My last reference the Link as described.
Included as part of my reference was the following.

But first let me say I don't see anyone disagreeing with what you are saying other than to point out you may be different than other parts of the country. The following case citation speaks to the relationship between the HOA and the members. It is a Florida case. I think it represents some explanation of how the courts will decide when the subject is in question. You may not agree, you may not be required to abide by this, but it is a question for all associations that can rear it's head and the court may be called to decide.

Drafting Covenants

Webster v. Ocean Reef Community Assoc., Inc., 994 So. 2d 367 (Fla. Dist. Ct. App. 2008).

A Florida district court of appeals held that an Association's covenants that regulated sales of property could not be used to regulate gifts of property. The governing documents of the Association provided that a lot purchaser had to be approved as a member of the Association to be able to buy the lot.

Plaintiff was the beneficiary of a trust created by an Association member and her husband. The Association member conveyed its lot to the trust by quitclaim deed. The trial court held that the transfer to the trust was a gift! because no value was given in return. While the governing documents of an Association create a contractual relationship between the Association and its members, the provisions of the documents in question were inapplicable in this case. The Association could not present any express provision that required approval by the Association of anyone who took property through a donation.

Covenant interpretation is crucial to their enforcement. Associations should therefore be cautious when drafting their governing documents to ensure that their plans and wishes will be met.

This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Permalink: sccommunityassociationlaw.com/2009/03/10/drafting-covenants.aspx

Copied from the reference as stated in this thread in a prior post.

Dorothy,

Well, all I can say is you are a great babysitter to the homeowners living in your assn. And with only 40 homes, your job isn't that all time consuming, but, my assn has 1,702 homes. I'm afraid our manager's monthly fee would be raised considerable if she were required to babysit our members as you do. You know we're talking about adults here!

Mary,
Dorothy's hard work can hardy be termed babysitting. If we conclude 40 homes are a snap to cover and your documents require notification, then you would need about 40 volunteers to handy the job, each covering 40 units.........a snap you say.

However with 1700 units,I would guess you would have a C/M with a staff or six or more to manage your place. Maybe not, just guessing from our POA size. not our condo size of 65 unit condo, and we do have a contract with each owner, in fact we cam lien the property, which has been mentioned more than a few times on postings on this site. You can not lien property unless you have legal justification.

Mary,
I just re-read your response and realized you said I was "required to babysit." Let me clarify this. I am not required to do anything. In such a small community it is so easy to stay visible, to know your neighbors and to be able to pay attention, to create a sense that someone's actually watching out for the 'hood. Not all of our Presidents, but most of them, have shared this sensibility. I will say that the ones who have had a hands off, just take care of business and no extras approach were not re-elected. Then again, they didn't really want to be either. I also believe this approach helps in situations of conflicts, where I will have enough knowledge of the homeowner, and they of me, that it won't be a spar between strangers. Adults we may all be but it is human nature to want to be acknowledged.

I surely don't know how it would work in gigantic developments, to foster and support a cohesive community. I have seen some pretty impressive newsletters on-line from some of these hundreds-of-homes communities to help people stay connected. All of us here, except for one, are e-mail savvy, so I am always keeping folks abreast that way too, for which I say, "Halleluiah!"

Dorothy