HOA Holds Transaction Hostage!

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ShockedWhaaattt? It's true folks! I'm working on an REO representing the buyer. The seller's agent requested the escrow officer order the HOA docs after we had an accepted contract. After 3 days of no communication from the HOA, the officer was informed that docs would not be released until after the property had an inspection performed by the HOA.

 Oh, course the inspector happened to be going on vacation and wouldn't be returning until 2 days prior to our closing date!

 What can we do? Absolutely nothing, in my opinion! What should have been done? At the time of the listing, the listing agent SHOULD have contacted the HOA to find out if they had any weird rules that could delay closing a pending sale!

 You know, I rarely contact the HOA to ask questions. They are so darned hard to get in contact with, are usually impatient with my "dumb" questions, or just started working there and don't know what the heck they are doing!

 It would be prudent just to check in with the HOA when you first list the property to verify the name of the association is correct, that you have the correct phone number (50% of time the phone number is wrong on the MLS) and a contact person.

 In addition, ask;

 How much is the doc fee?

 How do want to be paid for the docs? Upfront/through escrow?

 Will you accept a check/credit card/cash for payment?

 Is there a doc request form that needs to be completed?

 How much time does it take for you to process the order?

 Do you deliver the docs or will we need to have them picked up?

 Do you require any inspections of the property prior to closing?

 Is there anything else we need to know?

 OK, it's a phone call I hate to make, but if means our transactions won't be held hostage by the HOA, I guess I'll have to swallow what little is left of my pride and sanity and just do it!

Comments (6)

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

This is an area where the banks are getting a free ride.  In my area, until the buyer has the docs, they can walk.  Considering the risks associated with buying real estate, that seems like a good idea. 

Oct 01, 2008 09:48 AM
Kona Home Team (luva llc) Lance Owens (RS)
Kona Home Team (luva llc) - Kailua-Kona, HI
Getting transactions done, when nobody else can!

That Seems INSANE - I know our HOA docs usually run about $350.00 and most can be ordered right on line - but to have them hold up a sale???




Oct 01, 2008 09:52 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Lance, Yeah! Those HOA people are a tough crowd!

My biggest concern is what if the HOA finds something in the inspection they don't like? Will they hold up closing until it's fixed/repaired/whatever? Thanks for your comment!

Oct 01, 2008 09:56 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Hey Lenn!

Here in California, the buyer's also have a right to cancel escrow if they don't approve the HOA docs. We would never allow an escrow to close without this happening. Unfortunately, the buyer really has his heart set on moving in on a particular day. But it may not happen due to this quirky HOA rule!  Thanks for your comment!

Oct 01, 2008 09:59 AM
Rich Mielke
REMAX Results, Frederick MD - Frederick, MD
REALTOR, Frederick Maryland Real Estate

The underlying HOA inspection is important. It prevents the finger pointing of "it was that way when I bought it" argument.

Oct 01, 2008 10:09 AM
Diana Turnbloom
Escrowcoord.com - Martinez, CA
The Leading Expert in TC Services & Education

Just wanted to let y'all know I had a second HOA on another transaction do the same thing. They are asking for $5000 to be held in escrow until this inspection is completed!

Agents beware!

Oct 15, 2008 05:36 AM