Homeowners Associations, love them or hate them they exist and if you’re buying or selling a home that is governed by an HOA it can complicate things. HOA’s are typically involved in every real estate transaction. The buyer will most likely have to go through an application/ approval process. While the seller will need to be “current.” Meaning no HOA violations or outstanding balances due to the HOA.
What are HOA Violations?
What is considered an HOA violation will vary from community to community. But they will be outlined in the community by-laws and/or rules and regulations. In my experience, the most common HOA violations are for maintenance items. Things like exterior painting, landscaping, and pressure washing. A majority of HOA’s will have a list of violations, big and small. Some of these violations can be so minor that people don’t even realize they’re violations, like a mailbox that’s a little crooked or a light that isn’t operable. Sometimes HOA violations can even turn into liens on the property if the seller neglects to correct the violations.
How Does the Seller Determine if They Have Any HOA Violations?
Typically when there is an HOA violation on a property the seller will receive written notification from the HOA. The letter will detail what the violations are and when they need to be corrected by.
How Does the Buyer Determine if the Seller Has Any HOA Violations?
A buyer certainly can’t take a seller’s word whether or not they have any violations. So the title company or closing attorney will order an estoppel certificate. An estoppel certificate is a document provided by the HOA/ Property Management Company to the closing company outlining if the seller has a past due balance, what the current HOA fees are, any assessments and violations.
What Happens if the Seller has an HOA Violation?
If there are any HOA violations the seller will need to clear them up prior to closing. Once completed request the HOA to re-inspect the violations to make sure they will be cleared.
What Happens if the Seller Doesn’t Correct the HOA Violations?
It’s not uncommon for HOA violations not to be addressed prior to closing. Sometimes the seller is unaware of any violations and the closing company didn’t receive the estoppel certificate back in time for the seller to correct the issue.
So if you’re sitting at the closing table and the HOA violations haven’t been cleared up there are a few options.
One option is to delay closing until the seller resolves the HOA violations. However, not all buyers are in the position to wait.
The second option is for the seller to put money in escrow, which will be held by the closing company. If the seller corrects the violations within the time period agreed to they will get their money back from escrow, but if they don’t the buyer will be given the money to correct the violations themselves.
To give the seller incentive to correct the violations and not let it fall on the buyer the amount in escrow is usually a lot more than the actual cost to clear up the violation. However, this isn’t always an option, every situation is different and would need to be explored.
Can HOA Violations Blow Up a Home Sale?
Yes, they certainly have the potential to do so. Not all sellers and buyers will be agreeable, which depending on how the contract was written might end up in court. However, most sellers and buyers have the same goal of getting the deal closed, so the likelihood is small, but it can happen.
Sellers should address any HOA violations prior to putting their home on the market, if they don’t have any violations they should double-check with their HOA and make sure. While getting a home pressure washed doesn’t seem like a big deal, but it can be if the seller is informed of a violation on December 24th and closing is scheduled for December 26th because it may be next to impossible to get a pressure washing company out on Christmas Day.
Please consider spreading the word and sharing; What Are HOA Violations and Can They Blow Up a Home Sale?It's not uncommon for a home to have to HOA violations, but when there is an HOA violation on a home being sold it can get very complicated. #homebuying #homeselling
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About the Author
The above real estate article “What Are HOA Violations and Can They Blow Up a Home Sale?” was written by Michelle Gibson of Wellington Florida Real Estate. Specializing in residential real estate since 2001 Michelle Gibson is experienced in assisting buyers, sellers, landlords, tenants and would love to share her knowledge and expertise and guide you through the entire real estate process.
We service the following areas; Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more. If you are considering selling your home, we welcome the opportunity to work with you and list your home with a top Realtor in Wellington Florida