A New Best Practice. The Best Practices Committees is hard at work updating CMR’s Best Practices. Five new ones are being added this year. Here’s one of them
ISSUE 2. HOAs/POAs
Some subdivisions are managed by Home Owner Associations (HOAs) or Property Owner Associations (POAs). New property owners are sometimes not aware until AFTER they move in that there are restrictive covenants, annual assessments, rules and regulations and consequences for non-compliance. Covenants and rules can apply to pets, trash cans, car parking, landscaping, real estate signage, garages, fences, and rental property among other things. When new property owners get crossways with an HOA/POA upon learning about the covenants and rules, the REALTOR® is sometimes blamed for not providing them the information prior to buying. In addition, some HOAs/POAs are managed by third-party Management Companies who charge a transfer fees to the new homeowner at closing.
BEST PRACTICE for Listing Agents
Listing agents should obtain any HOA documents to ensure compliance with real estate signage. Some subdivisions dictate very specific signage, the number of signs that can be placed on a property and can prohibit signage in certain places, such facing a golf course. The seller is required to answer questions on the Property Condition Disclosure Statement (PCDS) pertaining to an HOA making the listing appointment a good time to learn where the covenants, rules and assessment information can be found. Since the phone number for the HOA is required on the PCDS the listing agent might want to obtain a current copy of any HOA rules to upload into MLS to expedite offers or include the URL of the HOA’s website in REALTOR® Remarks (not PUBLIC remarks).
BEST PRACTICER FOR BUYER’S AGENTS
Buyers’ agents have a duty to make potential buyers aware that the subdivision in which they are interested in purchasing/leasing is controlled by an HOA with covenants and rules that include rules, assessments, fees and consequences for non-compliance.
Prior to writing an offer:
- Share with the buyer where the covenants and rules can be found and encourage the buyer to read them carefully to be well informed about the expectations of the HOA. Many subdivisions have websites where HOA information is located.
- Determine if there is an HOA Management Company involved who charges a transfer fee to the new property owner at closing so that fee won’t be a surprise.