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

Understanding HOA Fees in a Homeowner Association

Houses facing street

When considering a move to a gated community in Long Beach, understanding Homeowners Association (HOA) fees is crucial. These fees are a significant factor in the overall cost of living and play a vital role in maintaining the quality and amenities of the community. They are also factored into a buyer's loan qualification before getting approval. Some HOAs are composed of multi-family style attached units (i.e., Stoneybrook), while others are made up of detached single family residences (i.e., Del Lago).

Multi unit building with balconies

Here’s a comprehensive guide to help you understand HOA fees in Long Beach gated communities.

What are HOA Fees?

HOA fees are monthly or annual payments made by homeowners to the Homeowners Association, which is responsible for managing and maintaining the community common  areas. These fees fund various services, amenities, and community upkeep. Not all the factors listed below will necessarily apply to the association under consideration, there may not be a guard gate, interior roads or a pool. In Long Beach, there are however numerous association which do include many features on the list. It's important to know all the features you may be paying for.

What Do HOA Fees Cover?

HOA fees in gated communities often cover a wide range of services and amenities, including:

1. Security Services

   • 24/7 security personnel
   • Gated entrance management
   • Surveillance cameras and security systems

2. Maintenance and Repairs

   • Landscaping and lawn care
   • Street and sidewalk maintenance
   • Common area repairs (e.g., clubhouses, pools)

3. Utilities

   • Water and sewage for common areas
   • Lighting for streets and common areas

4. Amenities

   • Upkeep of recreational facilities (pools, gyms, tennis courts)
   • Clubhouse maintenance
   • Community events and activities

5. Insurance

   • Insurance for common areas and community structures

6. Reserve Fund Contributions

   • Savings for future large-scale repairs and replacements (e.g., roofing, road resurfacing)

Factors Influencing HOA Fees

HOA fees can vary significantly based on several factors:

1. Community Size and Type

   • Larger communities with more homes often have lower fees due to shared costs.
   • Luxury communities with high-end amenities may have higher fees.

2. Amenities and Services Offered

   • Communities with extensive amenities (pools, fitness centers, golf courses) typically have higher fees.
   • Enhanced security measures can also increase fees.

3. Maintenance Requirements

   • Older communities may require more frequent repairs, leading to higher fees.
   • Communities with extensive landscaping or high-maintenance amenities may have higher costs.

4. Management Style

   • Professionally managed HOAs may have higher fees due to management company costs.
   • Self-managed communities might have lower fees but require active homeowner participation, and the knowledge to self-manage.
     

How Are HOA Fees Determined?

HOA fees are typically determined by the community’s budget, which is developed by the HOA board. This budget outlines all anticipated expenses for the year, including maintenance, amenities, and reserve fund contributions. Homeowners may have the opportunity to review and comment on the budget before fees are finalized.

Why Do HOA Fees Vary in Long Beach?

In Long Beach, the variation in HOA fees can be attributed to:

• Location: Communities closer to the coast or with scenic or ocean views usually have higher fees due to premium real estate values.
• Community Size: Smaller, exclusive communities may have higher fees to cover fixed costs among fewer homeowners.
• Amenity Quality: Communities offering high-end amenities or newer facilities often have higher fees to maintain these features.

Pros and Cons of HOA Fees

Pros

• Well-Maintained Community: Regular maintenance and repairs keep the community attractive and functional.
• Access to Amenities: HOA fees provide access to various amenities without additional out-of-pocket costs.
• Property Value: Well-maintained communities often see higher property values.

Cons

• Cost: HOA fees are an additional expense on top of mortgage payments and property taxes.
• Restrictions: HOAs may impose rules and regulations that limit how you use or modify your property.
• Financial Management: Poor financial management by the HOA can lead to unexpected fee increases or special assessments. Recent insurance increases in the market also have an impact.
  

Tips for Managing HOA Fees

1. Budget Accordingly: Factor in HOA fees when calculating your overall housing budget.
2. Understand the Rules: Familiarize yourself with the HOA’s rules and regulations to avoid fines.
3. Attend Meetings: Participate in HOA meetings to stay informed about budget decisions and fee changes.
4. Review Financial Statements: Regularly review the HOA’s financial statements to ensure funds are managed properly.

Conclusion

Understanding HOA fees is essential for anyone considering moving to a gated community. These fees ensure that the community remains secure, well-maintained, and equipped with desirable amenities. By understanding what HOA fees cover, how they are determined, and how to manage them, you can make an informed decision and enjoy a hassle-free living experience in your new community. When in escrow, make sure that all documents submitted to you as the buyer are reviewed before you investigation period expires.

For more personalized advice or to explore gated communities in Long Beach, feel free to contact me. With my experience in HOAs, I can provide detailed insights and help you find the perfect home.

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

California Law: Balcony Inspection Due 1-1-2025

The balcony inspection law deadline is looming. Owners of buildings with three or more units with at least one balcony must complete their initial balcony inspections by January 1, 2025.

However, not everyone needs to worry about this law. The inspection requirement applies only to the following types of property:

• Buildings with three or more multifamily dwelling units (this includes condominiums),
• When there is an elevated balcony, stairway, walkway, or deck (at least six feet above the ground),
• That is supported in whole or in substantial part with wood or wood-based material, and
• The balcony or walkway and the load-bearing components thereof extend beyond the exterior walls of the building.

If the stairway or walkway does not extend beyond the exterior walls or if the balcony is not supported in whole or in substantial part by wood or wood-based products, then this law does not apply. Individual owners of condo units are also not required to perform an inspection; that requirement is placed on the condo association itself.  California Association of REALTORS

Building with outset balconies

In condo associations, a licensed engineer or architect must perform the inspection; in other properties a licensed general contractor with A,B or C-5 license may perform the inspection. In condo associations, the law allows the repairs to be done by the inspector, but associations may wish to hire a separate entity to do any necessary repairs.

Several REALTOR forms are being revised, or have been, to include this legal requirement and advise the parties about it.  Fannie Mae loan guidelines require the lender to review the report and repair progress for loan qualification purposes; without completion, an HOA property, for example, will be ineligible for a Fannie Mae loan. Why is this important? Because Fannie Mae carries about 70% of the mortgage market.

For more specifics on this law, which requires an inspection every 9 years, go to Civil Code Sec 5551 information

Please contact me if you would like a one-page Guide that summarizes the law. 

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

What Could the Potential Loss of Insurance Mean for a California Home Transaction?

The news about State Farm not writing new policies is part of a larger story.  

It's not news that premiums have increased and that areas of wild fires have seen a pullback from insurance companies. The refusal by insurance companies is not just in climate zones, many  types of properties are now affected, including areas that are low risk of fire and flood.

If you're a buyer or seller and currently in a transaction, be aware that the buyer contingency in a standard California Association of Realtors contract allows for investigation of the property, including insurance issues that may prevent coverage.  This is very important that the buyer understand their contracts, and follow up completely on insurance coverage.  Under standard timelines, the buyer contingencies are removed assuming the buyer is satisfied with various areas of investigation. However, since lenders offering a mortgage want to see proof of insurance coverage prior to close of escrow, buyers are strongly advised to obtain an insurance binder or evidence of commitment to insurance coverage as soon as possible in the escrow period (the 1st day it opens), and not remove their buyer contingency until they know they will have insurance policy on that property. Otherwise, they may risk losing their buyer deposit under the terms of their contact with the seller.

Homeowner associations are seeing increases in their master policy premiums, changes in coverage limits, or a refusal to renew policies.  If an HOA master policy isn't renewed, then the mortgages of the condominiums owners are also at risk, since lenders want proof of that policy coverage for the common areas. Or, in the case of some associations, the increase in premium may be so huge it causes a special assessment: one HOA reported in the San Diego Union Tribune ended up with an $8,000 per unit cost for master policy insurance coverage.

If you're a homeowner with current coverage, do not let it lapse, because it may not be renewed.  The California Fair Plan may be an option for some residents and businesses; it protects the home for fire risk and will satisfy a mortgage company's insurance requirement, but it does not cover theft, flood, earthquake, hail, vandalism or personal liability (only special earthquake policy provides coverage for that). 

Insurance brokers are reporting challenging coverage searches for their clients, and are not always successful.  The one area of insurance so far not reporting a problem is renters insurance, which does not cover fire risk.  

If you are not currently represented by a Realtor in a transaction and are interested in finding out what the buyer contingencies are in a purchase transaction, please contact me via phone, text or email.

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

More Realistic Lender Rules for HOAs would permit more Buyers to Buy Affordable Homes

According to the National Association of Realtors, there are between 145,000 and 155,000 condominium projects in the United States.  As background information, in order for FHA loans to be approved in a condo development, the entire association must be approved by HUD (per its guidelines) and this approval must be obtained every 2 years. That is a lot of paperwork for most HOAs to focus on, along with all their other usual work in maintaining their association, via their Boards of Directors.   "As of January 2019, FHA has approved only 9,427 of 52,410 condominium project applications." Hence, many association in the U.S.--certainly in Long Beach--have dropped their former approvals, and sellers must now depend on buyers who obtain conventional financing.  But they are losing prospective buyers, since many first-time buyers opt for FHA loans for a variety of reasons.

HUD has been asked to lengthen the recertification process time, as well as loosen up on other items such as owner-occupancy requirements.   Currently, 50% owner occupancy is required for FHA loans, but HUD is being asked to reduce that to 35%--because many HOAs do not have rules about how many rentals are allowed, and lower owner occupancy ratios are excluding buyers bringing FHA loans with them. Also, HUD restricts the number of FHA loans allowed in a project to a very low percentage, but eliminating that rule would allow more buyers to buy. In the past, "spot approvals" were allowed, meaning one unit could be approved for an FHA loan in a non-approved building, as long as that HOA met certain criteria.  Spot approvals are once again being requested, again, this would increase homeownership.  The two-year approval period is asked to be increased to five years, this would vastly help Boards of Directors and sellers alike.

Given the almost daily appearance of lack of affordability for buyers in the newsfeed, an opportunity to buy a condominium, which is a lower sales price market compared to houses in many areas, is an opportunity for homeownership for all.

If you are interested in a condominium purchase, or finding out about the features of condo owership, please contact me via phone or email. I am familiar with condos, and would be happy to share my information with you.


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

California Homeowner Associations Are An Owner Option for Many

Homeowner associations continue to be a popular form of ownership for all age groups.  In 2006, there were 43,000 homeowner associations in California, housing between 8.5 million to 10 million people.*  The Aliso Viejo Community Association in Orange County alone had about 15,300 units at that time. Such associations are favored by cities because HOA members help shoulder the newer infrastructure costs through their dues paid to maintain their common areas.

So a 2018 survey conducted by Community Associations Institute demonstrating owner satisfaction in these communities might also be a reflection of what today's housing choices are in many areas, including Orange County where HOAs are prevalent.

But in spite of that, many people do see advantages: affordability, convenience, safety, uniformity, shared responsibility in costs and maintenance, and association recreation features.

Common complaints are rising HOA dues (or having to pay any at all), architectural standards which may seem restrictive, unpopular rules, complaints about the Board of Directors, and lack of rules enforcement, to name a few.

But as the graphic shows, the CAI survey results show:

 When it comes to fees that are assessed monthly but often paid quarterly, prospective buyers or current homeowners should remember that these amounts cover certain basic services such as insurance premiums for the common area services such as roads, pools, and tennis courts, maintenance for these features, certain utilities such as water and trash service for each unit, BBQs and recreation rooms, which they might otherwise have to pay for if they owned a non-HOA home, or might otherwise not have some of those facilities at all.  And such costs continue to rise in California as insurance risks also rise.  However, for many people, multi-family style condominiums are an ideal entree to homeownership in certain areas, much more affordable than buying a single family home in the same neighborhood.
A well-managed association can be a blessing for some, but if not well-managed, or with Directors who do not enforce the CCRs or understand them very well, there can be challenges.  CCRs, voted into existence by the owners after initial setup by developers, are a contract between the owners and the Board of Directors.  They are the underlying foundation of operation in the community, along with the By-Laws and the Rules and Regulations.  Very important to follow them!

If you are interested in a condominium, townhome or house in a homeowner association or PUD, please contact me.  I have experience with this type of property and can help you navigate your way into your next home!

Julia Huntsman, REALTOR since 1994, Broker | www.juliahuntsman.com | 562-896-2609 | CA Lic. #01188996

* https://www.ocregister.com/2006/11/12/educating-hoas/ 

Help for Buyers Who Want a Condo

California Association of REALTORs Housing Affordability Fund’s Homeowners Association Grant Program will provide qualified first time California homebuyers up to six months of HOA dues, not to exceed $2,500.  C.A.R.’s Housing Affordability Fund has allocated one million dollars towards this program.

How to  qualify?
• Homebuyers must use a California REALTOR® in the transaction (REALTORS® must apply on behalf of their client)
• Purchase a primary single family residence* in California with the intent to occupy the property as your primary residence for 2 years
• Be a first-time homebuyer*
• Buy a home with applicable HOA dues/fees
• You must have used financing to purchase the single-family dwelling
• The purchase price of the Single-Family Dwelling* must not exceed 150% of the mortgage limit set by the FHA for one-family units in the county in which the Single-Family Dwelling* is located

Please note: HAF must receive all program requirements no later than thirty (30) days after closing escrow.
Want to know more? Please contact me by phone or email

How Do HOAs Work?

When you purchase a home, there's a good chance you'll have to pay a homeowners association fee, especially in gated communities, townhouses, condominiums, and other similar planned neighborhoods. The idea is to keep common areas clean and maintained for the benefit of all, and there's usually an HOA board of directors that is responsible for setting the rules and regulations, and carrying out the provisions of the CCRs--a foundation HOA document naming conditions, covenants and restrictions.
Each HOA is different, but most have the same core elements. Most associations employ a qualified professional property manager which assists the Board. You'll typically pay your HOA fees either monthly, quarterly, or annually, and the amount of those fees are an important factor to consider when you're weighing your options for a new home. Lenders, for instance, will need to know that fee amount as part of your purchase mortgage loan approval.

So what is typically included in your HOA fees?

First, the fun stuff Amenities are typically the big perk of living in a community with an HOA. While you lose out on some of the freedom of living without an HOA, you instead get community amenities like a maintained pool, gym, clubhouse, tennis courts, and other amenities. The HOA fees pay for cleaning and maintenance, so-in theory-you'll always have a clean pool whenever you want to use it.
Protecting the community HOA fees often contribute to insurance for the community amenities, as well as a  reserve fund for unexpected repairs to damaged community property--think damage from weather or accidents. California, for instance, requires a reserve fund which is typically contributed to at the rate of 10% of total annual income (usually the HOA fees paid by owners).
General maintenance Your HOA fees will go toward maintaining the general safety and upkeep of the community. This means things like elevator maintenance for condominiums, trash/recycling services, interior roads and other "common area" features as contained in the HOA documents.
Be active in the association There may be a board of directors voted into office by the owners, who are required by law to do certain things, but homeowners associations exist for the betterment of the entire community, and every voice matters. HOA meetings--and the amenities they support--provide great opportunities to meet your neighbors and make your community a better place.

For additional information on condo buying, go to http://www.juliahuntsman.com/condo-living.html

Starting in 2016, Delinquent HOA Fees May Be A Part of Your Credit Score

Consumers' financial obligations for mortgages, auto payments and credit card payments have long been part of their credit profile. However, HOA dues payments have not. Although non-payment of HOA dues, in California, can eventually even trigger foreclosure by the Board of Directors, these payments have not been in included in credit reporting agencies. Now, Sperlonga, a credit data aggregator, is the first company to provide HOA payment and account status data to Equifax, which is one of the three major credit-reporting agencies. "A full rollout of the new HOA reporting to Equifax will go live in October 2016. And property owners who do pay on time will see a similar reflection on their credit scores. " 

According to the Community Association Institute, homeowner associations and property management companies collect approximately $70 billion in HOA payments each year through at least 333,000 community associations." Owners with a history of delinquent payments and/or non-payment can cause a great deal of financial problems for an association, especially smaller associations fewer than 10 units where there is a smaller risk pool. An HOA's operating budget and reserve funds may not be able to keep up with needed maintenance and infrastructure replacements without timely payments by all members, and those associations with more available funds will be stuck with fees and costs of pursuing delinquent owners, an eventual cost to all owners.

If you're contemplating buying a condominium or other property within a homeowner association, you are also agreeing to pay for your share of the common area upkeep, including insurance and maintenance costs. This is one of the reasons why your lender must order certain documents from the association during escrow to make sure you are well qualified to cover the fees and costs, as well as including that information in your upfront loan qualifying process. For people who may have reasons for temporarily falling behind in payments, a board may well be negotiable in setting up a payment plan--it would pay to approach the Board or your property manager for a discussion before becoming a delinquent owner.

New California Disclosure to be Made by Condo Associations per AB 596

Is your HOA FHA-approved?

This was actually signed into law last August 12th by Gov. Jerry Brown, requiring condominium associations to disclose to their members whether their developments have been approved for FHA or VA financing. This is an annual disclosure along with the other HOA disclosures submitted 30-90 days prior to the end of the fiscal year.  AB 596 adds the requirement that, on a separate piece of paper in at least 10-point font, there will be statements saying whether or not the development has been certified by FHA or the Department of Veterans Affairs.

I believe I have posted before about the declining number of FHA (or VA) approved homeowner associations.  Why is this important?  Because the available number of buyers for a condominium increases accordingly.  There was a time when "spot" I believe I have posted before about the declining number of FHA (or VA) approved homeowner associations.  Why is this important?  Because the available number of buyers for a condominium increases accordingly.  There was a time when "spot" loans could be done, but no more.  The entire complex must be approved for FHA loan, that also applies for VA loans too.  But when a complex is approved for FHA, the VA requirements are similar.

To give an idea of how extreme the problem is, out of 228 complexes listed in Long Beach on Hud.gov, all of which were once FHA approved, 17 out of the first 25 on the list are expired; 20 out of 25 on the second set are expired.  That's 37 out of  50 complexes listed are unable to sell units to an FHA buyer. And so on.

One-quarter of the state's housing stock is located in common interest developments, and according to Bob Hunt, a California Association of Realtors director, fewer than 30% are approved for FHA financing, and even fewer for VA financing.  This situation does not have to exist.

Many association members are unaware of the status of their HOA, and many think it may be FHA approved because it was in the past.  The guidelines changed:  spot loans (per unit approval) was eliminated, and associations are required to renew their FHA status every 2 years.

If your association has a property manager, they should be able to help.  If not, there are lenders who are familiar with the application process and may readily give their assistance.  Please contact me for more information if you need it.

The important thing to realize is that many qualified buyers can buy with an FHA loan on 3.5 percent down payment, and obtaining a ready, willing and qualified buyer for a property can go much faster with FHA approved associations.

Points to Ponder When Considering A California Condo or Homeowner Association

Versailles HOA Condominiums

Single Family in Bixby Village HOA

Condominiums and other types of units in common interest developments (CID) are very appealing because they may offer homeownership in an area where houses cost much more, security, amenities, neighbor accountability, and less personal responsibility for certain maintenance issues that might otherwise be required in a non-CID single family home.

The most common form of ownership in Southern California is ownership in a condominium project where the owner has title to an individual unit and an undivided interest in the common area. Other forms are stock co-op, own-your-owns, and planned unit developments (PUDs).

The common areas are the areas outside the unit such as walkways and lobbies.  They also include, if present, exclusive use areas such as parking spaces, balconies, and private patios, which many people think they bought when they bought their condo, but in almost all circumstances what they acquired was the right to exclusively use them.

A standard part of the purchase contract includes the receipt and review of association documents which the seller is required to provide.  So often, though, these documents, which include the CCRs, the Rules and Regulations, and By-Laws, are not so thoroughly looked at during the buyer's contingency period, because there seems to be so much else to do, like go to your job everyday.  So the more you know beforehand, the better off you'll be.  Some of the more common concerns that pop up are pets, parking, smoking, and the hours on the association swimming pool or tennis court.  HOAs may regulate the number and type of pets within the guidelines of the pet law; smoking is becoming more of an issue even within private units because smoke drifts out windows; and be prepared to carefully check out the assigned parking area because you'll be signing a disclosure form from the seller so that your oversize truck does not become an issue when you move in.  Why is it so important to know your documents? Because they are voted in by the association members, and they form a contract between the owners and the Board of Directors whose duty it is to enforce them.

If you are buying into a small association, you want to verify that they have an active association as required by law--nothing could be worse than paying dues and not knowing where the money is going.  How old are their CCRs?  Yes, it's still not unusual to find 30-unit associations operating on original documents from the 1970s.  Just be aware that many California laws have changed since then and that older documents will not reflect those laws.  Associations are required to make a growing number of annual disclosures to their members, i.e., starting 1/1/2016, they must disclose in their annual budget if the project is FHA/VA qualified (FYI:  a growing number of formerly FHA-approved associations are not meeting current FHA requirements).

An important law effective January 1, 2015 requires the seller to pay upfront for all HOA documents (per Civil Code Sec. 4525) provided to the buyer.  This can amount to several hundred dollars depending on property management companies who typically manage the transmission for the seller; so the seller may instead forward complete copies directly with written verification (form provided by your Realtor) if he/she already possesses them.  You the seller will have to order what you do not have, but your costs should be greatly reduced.  The contract specifically details these and other HOA documents, and what the buyer or seller will pay for, because non-required documents may be paid for by the buyer.  A new owner could expect to find topics addressing solar panels, satellite dishes, roofing materials, sign and/or flag displays, right of board entry (or not), tenant use of common area, storage, parking, noise, use of swimming pools, architectural control, smoking, and much more including the owner's duty to pay dues and other assessments, what the board may impose a lien on and how, and how the board is elected.

 If you would like a more detailed written discussion about the rights and responsibility of homeownership in various types of common interest developments, please contact me with your information and I will forward you the information.

New California Real Estate Laws for 2015

The following are some of the new real estate laws taking effect in the future in California.

California brokers are required to keep transaction records for at least 3 years. These records used to include text messages, instant messages and tweets, but per AB 2136, as of January 1, 2015, such electronic "ephemeral" records are not now required to be kept.  If you wish to maintain a good permanent record of communication with your agent, faxed documents and/or e-mail messages are a better way to go.

Many HOA associations use the services of a property manager who commonly carries out the forwarding of HOA documents to the buyer during escrow.  The fees charged by them for the gathering, production and delivery of such documents has been the subject of controversy and regulation in the past, all the more so since electronic documents do not incur the expense of actual copying and messengering to an escrow office that once was common.  To eliminate the practice engaged in by some companies where non-requested documents were included with requested documents--and charged for--document bundling is now prohibited. It is the now the responsibility for the seller to pay HOA document fees, and the fees must be itemized for mandated disclosures, i.e., CCRs, Minutes, By-laws, special assessments, financial/budget statements, rental reports, operating rules, etc.  The HOA must estimate the cost of such mandated documents prior to production, and if the seller possesses them electronically, they must be provided free of charge.  It is the responsibility of the seller to pay the HOA for any charges which the HOA is allowed to incur. The California purchase agreements have been revised to reflect this change in the law. So if you own a condominium and you are selling it, be aware that you are now legally required to pay for the mandated documents which are to be sent to the buyer, and that these documents can no longer be ordered by escrow using the buyer's deposit funds (a common practice until now).  These and other requirements are detailed in  AB 2430.

There are several other new HOA-related laws concerning exclusive use maintenance, use of recycled water, use of low water-using plants, judicially enforceable dispute resolutions, allowance of personal agriculture in a back yard.  For specific information on these, please contact me.

If you see one in your front or back yard, the California red frog is now the state amphibian.

On July 15, the California state water board adopted emergency regulations restricting water use for outdoor landscapes. The regulations prohibit using potable water outdoors, such as watering your lawn, that results in runoff water on sidewalks, driveways, roadways and your neighbor’s property; washing a car with a hose unless the hose is fitted with a shut-off nozzle; watering down your driveway and sidewalk; and using water in a decorative fountain unless it recirculates. Violation of the regulations is an infraction and may result in a fine of up to $500 for each day the violation occurs.  Various cities, such as Long Beach and Los Angeles, also have water regulations, i.e., watering on certain days and times. Try checking with their web sites.

AB 2310 allows the city attorney in certain California cities, including Long Beach, to demand that a landlord evict a tenant, after following certain procedures, for unlawful possession of weapons or ammunition or for other illegal conduct with controlled substances, or this action may be carried out by the City.

Seniors or disabled citizens may file for a postponement of their property taxes if household income does not exceed $35,500. This program does not include mobile homes, and takes effect July 1, 2016.  Claims are filed with the State Controller and any sums approved and paid by the state will become a lien on the property.

Please contact me for more detailed summary on some of these laws, I am happy to be of assistance.
www.juliahuntsman.com

What Are Some of the California Tenant/Landlord Rules About Pets In HOAs?

If you live in a homeowner association in particular, questions may have come up about the presence (or not) of pets when leasing property:

California passed new pet laws effective in 2000 for homeowner association owners, allowing a minimum of one dog, cat, fish, or bird (simply speaking) per owner.  The homeowner association is allowed to set further rules concerning size, number of pets above one, and other rules including the presence of animals in the common area, or animal behaviors, as long as they don't conflict with state law.

So what does this mean for tenants who are renting in a homeowner association, because the pet laws for owners do not necessarily apply towards tenants, the exception to many of the following rules being if the tenant is disabled and requires a certain service animal under "reasonable accommodation" rules.

• A landlord may ban pets in a lease; the law allowing pets in an HOA concerns owners, not their tenants.
• A landlord can restrict breeds or types of pets.
• A larger deposit may be charged if a pet is allowed, but the total deposit must comply with California's rules about maximum security deposits.
• If allowed in a homeowner association, the pet provisions will apply concerning any rules such as cleaning up pet waste in the common area, being leashed in the common area, or areas where pets may be allowed or prohibited such as pools or other recreation areas.
• If, for example, a dog bites or harms the postal worker who is on the property delivering mail, the dog's owner will be responsible for his/her pet, and the property owner could also have some responsibility depending on the circumstances involved.
• A landlord/tenant lease can require the tenant to obtain renter's insurance to cover pets on the premises.

For more detailed information, please contact me via phone or e-mail to be sent a more detailed summary prepared through California Association of Realtors about landlord/tenant pet laws and how they might affect you, whether you are or will be a landlord, tenant, or someone who may want to know more about service animals in this situation.

Getting Charged Too Much for HOA Documents?

One of the escrow expenses buyers usually pay when buying a property within a homeowner association are document fees for the CCRs, Rules and Regulations, and other documents they are entitled to. This sometimes amounts to several hundred dollars.  Even though a law prevents homeowner associations charging more than the actual cost for such documents, a loophole allowed an HOA to delegate this task to outside vendors, who could charge whatever they wanted.

Good news. Earlier this month, California Gov. Brown signed AB 771, and the loophole closed, preventing home buyers in common interest developments such as condominiums or townhomes from being charged excess document fees.


Buyers used to only have to pay $150 at the most, but that cost may now go up to $400, payable up front by the buyer. But if a charge goes much beyond that, a buyer should be aware that they perhaps are being over-charged, and ask for an accounting of that cost by the HOA or its property manager. A fee of $1000 is probably excessive, and would be considered a financial burden by most condo buyers, and could be an indication that a buyer is being charged for documents that are "bundled" in, and not required.

Is Your HOA FHA-Approved?

Many homeowner associations in Orange County and Los Angeles County are experiencing certain problems, and these problems could lead to more difficult-to-sell units in an already-soft condo market. For example, some loans are not getting approved for conventional Fannie Mae financing at the close of escrow due to too many owners being delinquent on monthly dues. As times become tough, and owners have to short sell, or go into foreclosure, the associations are not able to collect the scheduled income, and lowered reserves are a concern to lenders.

While associations are not required to have special approval for conventional loans, HUD now requires complete project approval before an FHA loan may be given. And the advantage is that sellers have more potential buyers with this approval, many more. FHA loans have made up 50% of the market in some areas, because they fit the 1st-time buyer's budget with 3.5% down payment, and 1st-time buyers are the majority of buyers in some markets, including condominiums.

If your association is up for renewal for FHA loans, or your association would like to be FHA approved, the following factors are essential for project completion:

1. Owner occupancy must be 50%.
2. No more than 15% of the units can be dues-delinquent over 30 days.
3. No one entity or person may own more than 10%--this is a problem in a 12-unit complex where 1 person owns 2 units, and this is not uncommon in areas such as Long Beach and San Pedro.

4. No more than 50% of the units may be FHA insured.

5. No pending litigation which adversely affects the entire association (collection and foreclosure litigation does not make the HOA ineligible).

HOAs must provide the condominium documents, along with certain information, and if eligible, the process may take about 60 days or more. This approval can help out owners who wish to refinance as well. You don't have to be selling in order to start the approval process, in fact, it's far better if the association obtains it before units go on the market, or an owners attempts a re-finance.

To be approved will usually cost about $1500 to $2000. For more information on documents HOAs provide, and help with finding a source, please contact me to find out where to get started. Some lenders will provide the approval if they are the source of your loan.

What Happens to Your Sale If You Don't Pay Your HOA Dues?

Many owners these days are having financial problems, and decide to stop making payments on both their mortgage and their homeowner association dues. They may later decide to sell as a short sale, do all their document submission to the lender, list their property, find an eligible buyer who is willing to wait, and look forward to opening escrow and getting it sold. And, common to many sellers, they stopped making payments several months prior, so now a significant dollar amount in delinquent HOA dues has built up--hundreds and even thousands of dollars are in arrears.

In California an HOA may initiate foreclosure on a property after 18 months of nonpayment (but then they take over all associated mortgage and other costs of that unit), but before that, an association after a few months of nonpayment may instruct its attorneys to file a lien. If a lien exists at the close of escrow, then it will raise the issue of getting it paid off prior to close, or delaying the close of escrow--and in a short sale, lenders may impose additional fees for not closing by the specified date. If the seller does not have the money to pay it off--this will include the dues, late fees and attorney fees--then perhaps the buyer would be willing to contribute, but if the buyer cannot or will not, then that particular escrow will not go forward. And if you have a Notice of Sale on your property already, the lender may no be willing to extend and wait for a new buyer--it just depends on the lender.

Another wrinkle for a closing is even if delinquent dues can be paid off at closing, the number of delinquent owners in the association may exceed the lender's guidelines, and now there's another reason it may not close escrow--for any owner. Non-payment of dues may force other HOA members to pay special assessments to make up for the loss of income, which may be a hardship for many owners who are struggling to stay current because of their own loss of income or job cutback issues. This may actually increase the number of delinquent owners.

Contrary to what many short sale sellers assume, lenders will not pick up all HOA costs, and many banks completely disallow any HOA costs in their approval, and that includes move-in, move-out fees, and provision of HOA documents to escrow as asked for in the contract, a total potential cost of up to $500 or more per transaction. Another potential outcome is that the owner will be pursued later by the association with a judgment filed against them. And I've also read that some bank approval terms are "requiring" buyers to pay the delinquency at closing, which is driving them away from the transaction.

So if the seller can't pay now because of all their financial problems, one option would be 1) to approach the association with a request to negotiate them down to what is possible, or 2) request a forbearance agreement and work out a payment plan over time. These are much better options for an owner who wants to do a short sale and avoid foreclosure.

The last piece of advice is that the homeowner should obtain legal advice. But unfortunately many people don't do that because that would be another bill to pay, so they look up information on the internet instead, which won't tell them about their specific situation. Find a legal clinic or some source of local legal advice which will be a resource. If you just decide to stop paying your HOA dues, it could ultimately cost you more than you think.