What To Expect From Your REALTOR® if You're Buying or Selling An HOA Property

Downtown Long Beach street view

Real estate professionals should encourage prospective home buyers to carefully consider what they’re buying into when they purchase a home in an HOA community. Both condominiums and single family homes/townhouses may be part of an HOA. Many buyers who would like a single family home may find that in the same area, an HOA property may be more affordable for them, so the following should be considered.

Fact: California is one of three states with the most homes under HOAs, 37% of all homes in the state are in HOAs. The other two are Florida (45%) and Texas (20%). Nationally, HOAs represent about 30% of the U.S. housing stock, or over 75 million owners.

REALTORs® Must Disclose:  Sellers, listing agents and buyer agents should disclose if a home is in an HOA community, as this is considered a “material fact” under the REALTOR® Code of Ethics. Agents who are REALTORS® must ensure that buyers and sellers are aware of any facts that could affect their decision to buy, sell or lease, says Deanne Rymarowicz, senior counsel of legal affairs at the National Association of REALTORS®. During the due diligence period of a real estate transaction, if not before, real estate professionals should advise their buyer clients about the existence of a homeowners association and stress the importance of obtaining and reviewing HOA governing documents, she adds. Listing agents should ask their sellers if an HOA exists in their community, as certain information, like monthly or annual fees, special assessments and shared amenities, can be included in the MLS.

Many times a client expects their agent to review and interpret the HOA governing documents, but that would be considered an “unauthorized practice of law,” which violates Article 13 of the REALTOR® Code of Ethics. For example, agents should not interpret an HOA’s CC&Rs, bylaws or budget, Rymarowicz cautions. Instead, agents should advise their clients to consult an attorney with any questions.

An Information source: Real estate professionals can help clients gather HOA documentation and facilitate answers to their questions from sellers, the HOA board or HOA management company. It should be noted that many property management companies respond only to requests from the seller/property owner/Board of Directors, in accordance with contract terms, so that buyers should submit information requests through their own agent, not directly contact the seller or management company. Also, agents should make sure that HOA disclosures and information packets are delivered and received in a timely fashion (in California they are usually provided to the escrow officer for distribution) as some states, such as California, allow buyers to terminate a purchase contract within a certain period. “It’s incumbent on agents to make sure the buyer is aware of any deadline to review information packets so they can make the right determination for them,” Rymarowicz says.

There are many more consideratons about buying into an HOA, including rules about landscaping, monthly fee amounts, security, pets, parking, rental restrictions, insurance, financing, are just some of the features that should be reviewed when considering an HOA purchase. In  California the buyer has a 17-day investigation period in the standard contract to receive and review the governing documents.

 More Information about HOAs:  https://www.doorloop.com/blog/hoa-statistics   - There are now over 363,000 HOAs in the United States, there were about 10,000 in the 1970s.

I have listed and sold many HOA properties, and would be happy to answer your questions, or provide you with additional information about selling or purchasing in an HOA.  Just let me know!

From "Navigating HOA Rules: Considerations for Real Estate Agents, Buyers and Sellers" by Melissa Dittman Tracey, National Association of REALTORS

 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

Dear Buyer: Did Your Offer Get Presented to the Seller?

In the current climate of multiple offers submitted by anxious buyers, circumstances on some properties may lead a buyer to wonder if the seller was ever made aware of his or her offer.

First of all, unless the seller has waived in writing, all offers are supposed to be presented to the seller--this is the listing agent's fiduciary duty to the client--whether verbally, in writing, or in person by the listing agent or in person by the buyer's agent.  But in today's world, the buyer's agent does not usually personally present to the seller, and the buyer relies on the listing agent's word that their offer was presented.  Through the end of 2018, there is no ethical or legal requirement for a listing agent or the seller to respond in writing or otherwise to a buyer's offer. It is regarded as a courtesy.

But starting January 1, 2019, there is a new requirement. Per a new Code of Ethics requirement by National Association of Realtors, " a listing broker or agent is required to confirm in writing that an offer was submitted to the seller if the cooperating broker who submitted the offer so requests. The listing broker or agent must provide the written affirmative unless the seller has waived  the obligation to have the offer presented."  So, 1) the buyer broker must request confirmation (there are several ways to do this), as long as 2) the seller has not already waived the obligation to have the offer presented.  The seller does have the option of waiving offers (best put in writing with the listing agent) if the seller wishes to avoid offers under a certain price, or with certain conditions he/she does not want to meet, i.e., a longer escrow period.  Sometimes under these circumstances, the buyer may decide to rewrite an offer in order to get the seller's attention.  Otherwise, if the buyer's agent requests it, the listing broker, or listing agent, will be required to submit confirmation in writing that the offer was presented, and this is most often done by checking and signing for a box on the offer form.

If you would like to know more about making an offer to a seller, please contact me!  There are many aspects to the offer forms via the California Association of Realtors, and early familiarity with them will make your transaction easier and smoother.



Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996