Can An HOA Stop The Sale Of Your Home?

Generally, Yes.

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The Colorado housing market is red hot - homes are selling in record-setting times. What happens when you prepare or are selling your home and the Homeowners Association (HOA) puts a stop to your sale? 

 

The statistics last year show that almost 70 million people lived under the auspices of an HOA. Each HOA has a set of rules that are spelled out in their Declaration of Covenants, Conditions, and Restrictions (CC&Rs).

 

When you decide to sell your home, you are required to disclose to your prospective buyers the property is part of an HOA community. The buyer has to know what the HOA dues, rules and regulations are.   

 

You should also inform your HOA you plan on selling and moving. Your HOA CC&Rs and bylaws may have a set of rules you have to follow before you sell. If you owe any past HOA dues, or even if you’re up-to-date with your dues, you should be ready to consult with your HOA board before your property closing.

 

Depending on your HOA, you may have to follow precise procedural steps and actions such as transferring information and payments. Your HOA may require you perform a specific home inspection report that has to be given to them before any sale.  Most HOAs will appoint their architectural committee member to inspect your home and ensure the home is up to code and meet all the HOA regulations. If some part of the home inspection does not pass, you will have to fix that before you sell it.

 

Home sales have been halted due to a discovery of an HOA offense such as the addition of patio stones or a paint color not approved by the HOA.  If the architectural committee finds a violation, you will have to repair, tear out or repaint plus accept and pay a fine for the offense before selling.

 

Your HOA may charge you a fee transferring paperwork to a new owner. Some HOAs will charge you a percentage of the sale price of the home (typically .5 to 1%). Some states allow the HOA to charge both a flat fee and a percentage of the home price to transfer ownership.

 

Before a sale occurs, any past dues, fines, fees, attorneys’ fees and/or collection agency fees must be paid in full.

 

Many HOAs may be facing or in the midst of a lawsuit of their own. Typical lawsuits come from homeowners over a violation of rules, unpaid dues, building defects, unfinished work by a contractor, arguments between board members, how the dues are or have been spent. Other lawsuits may be against the original developer or contractor. Check with an experienced and qualified HOA Defense attorney to determine what disclosures you must make to a buyer. The law varies state-by-state on disclosure laws and can be determined by the size of your HOA and other factors.