When purchasing real estate, you
might be one of the 25 percent of people who purchase a property in a common
interest development, which is more commonly known as a homeowners association,
or HOA. And while all properties have issues, HOAs have a unique set of
additional operational, legal and financial issues that buyers must consider,
analyze and review in conjunction with their purchase. Because many horror
stories are associated with HOAs, some people won't even consider buying into
one, which is understandable. It's ultimately a personal choice for a buyer to
consider.
These are few of those HOA horror stories. Keep in mind that
most of these stories would never have occurred if the buyer had just done
proper due diligence by reviewing the HOA documents, financial statements,
reserve studies, demand statements and CC&Rs (covenants, conditions and
restrictions). Each of these items would offer insight into "issues." It is your
responsibility as a buyer to perform the proper due diligence to avoid
purchasing into a disaster of a common interest development
community.
Ka-ching: Special assessment of $7,500 three days
after closing escrow. Did you hear the one about the couple who
didn't read the condominium board meeting minutes and notes about the $850,000
construction defect issue that needed to be repaired and would cost each unit
about $7,500 in special assessments? Yup, it was noted extensively for months
before this couple purchased, but they didn't read the stack of documents
related to their purchase that came from escrow. So they didn't know about the
assessment until the first board meeting - three days after they
closed. Tip:Read the board of directors meeting minutes
to help uncover potential assessments or other
issues.
Surprise! Buying a rental property that you cannot
rent. Many communities are limited to the number of rental units
that can be in the property. Once that threshold is crossed, no other owners can
rent out their units until other units convert back to personal residences. In
this example, a woman put down $20,000 cash on a condo but didn't read the
CC&Rs. She closed escrow on a $100,000 unit that she planned to lease out.
Unfortunately, the board blocked her from doing this because of the rules in the
CC&Rs. Unfortunately for her, she lost the unit to foreclosure about 12
months later. Tip: Read CC&Rs to understand
restrictions such as this one. A simple request to the board or management
company would have uncovered the problem, and this woman could have terminated
her purchase contract and saved $20,000!
Limited parking
space: Compact cars only! This horror story deals with a man who
bought a high-rise unit in an older building. His designated parking space was
next to the laundry room door. Due to the proximity to the door, his unit's
parking space was restricted, and he was not allowed to have a car wider than 6
feet. Luckily, he drove a smaller car, so it wasn't an issue. But if he had an
Excursion, it would have been a major problem. Tip: Read
your HOA documents thoroughly. Walk around and observe everything about the
property you are buying.
Speechless: HOA fees greater than
mortgage payment. This story involves a buyer whose HOA fees began
to exceed his mortgage payment. He lived in a restricted-income unit, so the
price was low and affordable. But, a couple of years in, the older building had
capital items that needed to be replaced, such as a roof and elevator. HOA fees
skyrocketed, and as a result, his fees went above his mortgage
payment. Tip: Read and understand the Reserve Study,
which could have tipped him off to upcoming repairs and
replacements.
Pool, clubhouse, common facilities foreclosed
upon. Lastly, this story is about an HOA where the developer built
the residential units on one lot and the clubhouse, pool and common areas on
another lot. The pool/clubhouse lot had a separate loan that went into default,
and an investor group bought that lot/pool/clubhouse at foreclosure. As a
result, they started selling pool memberships to community members in the
adjacent neighborhoods. Tip: Read the community governing
documents, which would've revealed the recorded map, plat,or plan for the
community.
Yes, HOAs can be a huge benefit to real estate ownership, but
they are complicated animals. You must understand the risks of common interest
development ownership, and most important, mitigate those risks by reading and
analyzing all the documents before you close escrow!
HOA
DISPUTES:
Most Ridiculous HOA Disputes
1 of 9
Photo: ABC News2 of
9
Photo: Portsmouth Patch/Courtesy of
Kimberly Bois3 of 9
Photo: Barbara Cadranel4 of 9
Photo: WMBF News5 of
9
Photo: Jodi Burr6 of
9
Photo: Youtube7 of
9
Photo: WEWS NewsNet58
of 9
Photo: Captain Clauer's Family9 of 9
Fullscreen
Sidewalk Chalk Art
Location: Stapleton,
Colo.
What the homeowner did: Sarah Cohen's 3-year-old
daughter, Emerson, drew on the sidewalk using chalk.
The HOA's
response: Chalk art potentially offends, disturbs or interferes with
"the peaceful enjoyment" of the community and is not allowed. "The association
is trying to go down a path of 'do no harm,' " an attorney representing the HOA
said.
Outcome: The issue will be brought to a vote at a
future HOA meeting. In the meantime, Cohen plans on continuing to let her
daughter draw on the sidewalks. "It's summertime, and God forbid my daughter is
drawing flowers, her name and hearts," said Cohen.
What the homeowner did: Sarah Cohen's 3-year-old
daughter, Emerson, drew on the sidewalk using chalk.
The HOA's
response: Chalk art potentially offends, disturbs or interferes with
"the peaceful enjoyment" of the community and is not allowed. "The association
is trying to go down a path of 'do no harm,' " an attorney representing the HOA
said.
Outcome: The issue will be brought to a vote at a
future HOA meeting. In the meantime, Cohen plans on continuing to let her
daughter draw on the sidewalks. "It's summertime, and God forbid my daughter is
drawing flowers, her name and hearts," said Cohen.
What the homeowner did: Sarah Cohen's 3-year-old
daughter, Emerson, drew on the sidewalk using chalk.
The HOA's
response: Chalk art potentially offends, disturbs or interferes with
"the peaceful enjoyment" of the community and is not allowed. "The association
is trying to go down a path of 'do no harm,' " an attorney representing the HOA
said.
Outcome: The issue will be brought to a vote at a
future HOA meeting. In the meantime, Cohen plans on continuing to let her
daughter draw on the sidewalks. "It's summertime, and God forbid my daughter is
drawing flowers, her name and hearts," said Cohen.
What the homeowner did: Sarah Cohen's 3-year-old
daughter, Emerson, drew on the sidewalk using chalk.
The HOA's
response: Chalk art potentially offends, disturbs or interferes with
"the peaceful enjoyment" of the community and is not allowed. "The association
is trying to go down a path of 'do no harm,' " an attorney representing the HOA
said.
Outcome: The issue will be brought to a vote at a
future HOA meeting. In the meantime, Cohen plans on continuing to let her
daughter draw on the sidewalks. "It's summertime, and God forbid my daughter is
drawing flowers, her name and hearts," said Cohen.
What the homeowner did: Nick and Jeni Dreis took
home a 6-month-old red kangaroo as a vocational training animal for their
16-year-old daughter, Kala, who has Down’s Syndrome.
The HOA's
response: The family should “immediately remove the kangaroo from the
property, as it is not a household pet nor can it be maintained for any business
purposes.”
Outcome: In the wake of widespread public
support for the Dreises, the HOA reversed its position. “The letter should never
have been sent,” said Jeff Crilley of the Estates of Legend Ranch Homeowners
Association. “[HOA officials] were unaware that the kangaroo was being used for
therapy purposes.”
What the homeowner did: Planted perennial flowers
in her yard. Kimberly Bois claimed she had the plants in her yard before the
condo board even existed and had permission from the developer to plant
them.
The HOA's response: Sent the homeowner 13
certified letters demanding she remove the plants, starting with a
cease-and-desist order and escalating to thousands of dollars in fines and
penalties. "It's not about do you like these flowers or don't you," said the
condo association’s attorney, Sandy Roberts. "It's a question of was it
authorized and is it permanent."
Outcome: Condo
association filed a lawsuit against Bois to pay $4,500 in back fines and $8,000
in attorney’s fees.
What the homeowner did: Barbara Cadranel put a
mezuzah on the doorframe of her apartment.
The HOA's
response: Threatened to impose a $50-a-day fine until the religious
door fixture is removed.
Outcome: The condo association
agreed that Cadranel could hang her mezuzah and rescinded all penalties and fees
against her. It also said it will allow residents to place mezuzahs and other
religious symbols on doorframes without requiring advance approval.
What the homeowner did: Tiffany Veloudis built a
playhouse for her 3-year-old son, Cooper, who has cerebral palsy, on the
instructions of the toddler’s therapist. It cost the family $5,000 to
construct.
The HOA's response: Demanded that the
playhouse be removed and ordered the Veloudis family to pay $50 for every day
the playhouse remains in their yard.
Outcome: After the
story garnered national attention, the association decided the playhouse could
stay until a solution could be worked out. State representative Richard
Henderson has submitted a bill to enable homeowners to build small structures
for therapy purposes with doctor approval, regardless of HOA rules.
What the homeowner did: Jodi and Timothy Burr put up
a front yard banner supporting their son, Corey, a lance corporal in the Marines
who was serving in Afghanistan at the time.
The HOA's
response: Told the family it was breaking the HOA's rule prohibiting
all signs from public display.
Outcome: The HOA sued the
Burrs when they refused to remove the sign. The Burrs argue that other
homeowners have signs in their yards, and that the enforcement of the rule is
“selective.” They also are trying to meet with the HOA to discuss possible
revisions to the rule.
What the homeowner did: A nonprofit homebuilding
group planned to build a house, free of charge, for Army Sgt. 1st Class Sean
Gittens, who was paralyzed in Iraq and is unable to speak.
The
HOA's response: The HOA stopped the construction of the home. It argued
that the Homes for Our Troops foundation didn’t file the proper
paperwork.
Outcome: The Gittens left the development
and are exploring other places to build the home. Homes for Our Troops has
agreed to continue the project in a new location.
What the homeowner did: Fred Quigly, a retired Army
chaplain and minister who served during the Vietnam War, put up an American flag
in his front yard.
The HOA's response: The flag violates
the HOA’s rules on flagpoles. It offered to put the flag at the entrance to the
development instead.
Outcome: The HOA relented and
granted Quigly the right to fly his flag in his front yard.
When it comes to perfect Designing Frontline Bathrooms At Lower Prices for our homes, which are often very suspicious that it is difficult, time consuming and expensive decision, but there are a variety of forms, and aspects that can be considered to give a better chance if the achievement Ideal bathroom next to you wanted.
For More Detail us at: http://www.ukbathroomhub.co.uk/
Installment loans bad credit direct lender offer the individual amount up to £10000 which will help the individual in fulfilling their both short term and long term needs in spite of their faulty credit scores.
ReplyDelete6 month payday loans direct lenders no credit check
installment loans UK
500 Same Day Loans
When it comes to perfect Designing Frontline Bathrooms At Lower Prices for our homes, which are often very suspicious that it is difficult, time consuming and expensive decision, but there are a variety of forms, and aspects that can be considered to give a better chance if the achievement Ideal bathroom next to you wanted.
ReplyDeleteFor More Detail us at: http://www.ukbathroomhub.co.uk/