Dear AZ Realtors,
If you question if something should be disclosed, it probably should. While HOA education has been severely lacking in our industry, it's not an excuse. We should all know about the HOA industry. Your buyers will think you are a rockstar if you use the information provided below. And if you agree that we need better laws to protect our clients and give them more rights, please support HOA reform and ask AAR to as well.
Did you know that homestead protection does NOT apply to all properties in HOAs?
Did you know the HOA managers are NOT licensed and regulated? Our clients should know that the management company is usually a signer on our HOA bank accounts AND is not accountable. They do what the board wants. There is no obligation to follow the law since they have no license that can incur a fine, suspension and revocation.
Did you know that if your client has an HOA problem that is CCR related, they can file a complaint at the ADRE ($500 for one issue, maximum of four issues). Note though, that the HOA can appeal in Superior Court. The owners other option is to hire an attorney.
Did you know that if there were more required disclosures in the law, that it would minimize the chance of the agents and seller being sued?
Did you know that undisclosed violations could harm your client after closing? The HOA could require the buyer to remove that extra parking slab, remove fencing, paint etc.
There is no CLUE report for the HOA. Did you know that an undisclosed pending insurance claim for personal injury could become a lawsuit after closing? Your buyer would be liable for their share. And if there are excessive insurance claims, that HOA could become high risk or worse, uninsurable.
Did you know that you can easily determine the risk of a big special assessment, and avoid a potential lawsuit? Has anyone showed you how? See my HOA 101 video at the link below.
Did you know that your client on a condo could be held responsible to pay the HOA insurance deductible (5k, 10k, 20k)? Do you recommend they have a special rider on their insurance to cover this?
Is your buyer buying because it has a heated community pool? The meeting minutes may disclose that the board is talking about not heating it, but your buyer is not provided meeting minutes.
Do you cover yourself when you tell a buyer that the HOA takes care of roof replacement and staircases? They might today, and not tomorrow.
Do you look at the resale demand statement? Do you look at the condo questionnaire? Do you look at the court records to see if the HOA has any lawsuits, or advise your clients to do so?
Did you know some HOAs may not have treated for termites in ten years but the chemical wears off in approximately five years? Insurance does not cover termite damage. A warranty does not cover termite damage.
Did you know that some owners may only owe $600 in late payments, but it can turn into $3000 with excessive HOA attorney fees?
Did know that the HOA can create unreasonable rules and fine your client? There is no department to go to for help.
There is no community disclosure statement by the HOA, like an owner has to provide. I'd like to know that there are issues with excessive roof leaks, termite and water damage before buying. And even after you buy, it may not be disclosed, until the big special assessment.
Did you know that there is no entity that audits the resale fees charged by the HOA management company? The boards don't see the demand statements, and the money is paid directly to the management company so it doesn't show up on the financials. The fees they are authorized to charge are on their management contract, maybe they should include a copy with the demand statements.
My HOA website contains a lot of information. Since there is not sufficient education for agents on HOAs, please educate yourself. Specifically look at the HOA Industry Advisory I use, and the HOA 101 video. (I'm not an attorney, just an agent like you.)
What can be done to protect yourself and your clients? Support changes in the law, and ask AAR to support HOA bills that require more disclosure, licensing and regulating of management companies, give our clients somewhere that will handle HOA abuse without seeing a judge, etc.
There is a legislative group meeting monthly with Senator Farnsworth regarding HOA reform. One problem is that the issues haven't been exposed and the public isn't speaking up. It would be great if Realtors supported HOA reform.