Home Owners Associations
100 Real Estate Tips in 100 Days (Day 12)
Associations of homeowners joined together by sharing real estate are now very common in the United States, and certainly in Metro Denver Although such associations may be called HOA’s or COA’s (for condominium), the legal reference in Colorado is “Common Interest Community” or CIC. Although a few associations are voluntary, most are attached to the land, and travel from one owner to the next as an exception to clear title. Said another way, if you purchase a home that is located in a common interest community, then you will become a member of the association and your property will be subject to the bylaws and rules of that association.
Colorado law requires that a buyer of real property (commonly a residence, although there are some commercial CIC’s) be provided evidence of a CIC’s bylaws, rules, financial status, and other disclosures that allow the prospective buyer ample information to understand the affect of the CIC on the property the prospective buyer may wish to purchase. The standard Colorado Real Estate Commission contract to buy and sell has language contained within the body that directs the seller to provide such information and disclosures to the prospective buyer. New home builder contracts also contain variations of the same language, as state law requires the consumer be made aware of any CIC’s that affect real property.
While it is the seller’s obligation to provide the CIC information to a prospective buyer, in practice the information is many time gathered by the appointed title insurance company for a fee, and provided to the prospective buyer.This activity occurs at the direction of the seller’s real estate licensee.Buyers should be aware that a non-represented seller may not be aware of the law, although a title insurance agent may forward such information to a buyer.
There are calendar deadlines requiring any CIC information is provided to the Prospective buyer, and the prospective buyer may terminate an agreed contract based on objections to the CIC information.It is vitally important that a buyer be aware of CIC’s and understands the affect of that CIC on the property, and the
proposed new owner of the property.
Because CIC’s affect a property’s value, HOA member’s should be aware of the activities of the HOA. While attendance at every meeting may be more than the average homeowner is capable of, not reading meeting minutes and having knowledge of the operating budget of the HOA may cost an owner considerable in lost property values in a poorly managed association.