One issue I've identified is that very little is discussed and taught about the potential issues with HOAs, and the HOA Industry itself. What we have not focused on is that all those amenities could change or go away based on decisions of volunteer board members (that are indemnified from any liability for their actions) and unlicensed and unregulated HOA management companies (they need not answer to anyone). That life in that HOA could either be pleasant and friendly or a constant source of confrontation and intimidation depending on the nature of that board or its managing agent. To that end I've tried to make it my mission to inform fellow Realtors and the public of things that they have to consider before buying in an HOA. I've written a sample HOA Industry Advisory at http://www.hoasavers.com/briefcase/30242_5192016105559AM13699.pdf covering issues about the HOA Industry that I believe all agents, buyers and owners should be aware of.
Who do you think the courts will hold accountable for disclosure issues where the buyer is harmed by failure to disclose significant material facts about the HOA and HOA Industry, or significant additional cost required by a special assessment not disclosed prior to closing? The volunteer board indemnified from liability for its actions, the unlicensed and unregulated management company or the licensed and regulated Realtor?
The Agency Disclosure came into existence due to problems with the public not knowing and being harmed. More people have been harmed by the current HOA Industry, and yet we have no disclosure about the very troubled HOA Industry. Possibly, this is because the HOA Industry has powerful lobby groups fighting to keep a disclosure from being utilized by Realtors, fighting to keep us from being educated on the numerous issues effecting our clients? Did you know that the court could hold you to a higher standard than the regulatory agencies? Are you comfortable just doing the bare minimum and taking a chance of being liable for damages to your client? The facts of the HOA Industry are reasonably discoverable. The disclosure of material facts trumps fiduciary duty. An HOA Industry Advisory helps agents protect themselves from future complaints. The best way to avoid claims of wrong doing is to lay all the cards on the table upfront. The fact that a real estate professional has fulfilled his or her obligations set out in the real estate licensing laws and rules may not necessarily satisfy the courts in the event of a lawsuit. An attorney has stated that using the HOA Industry Advisory probably provides you a certain level of protection. I have requested to speak to the AAR Risk Management Committee.
What I ask of you today is that you read the HOA Industry Advisory, and review any of the other information on my HOA website www.hoasavers.com, and learn as much as you can of the potential impacts on owning in an HOA. That you take this information and share it with other agents. And most importantly that you inform your clients on what to look for and what to ask prior to buying into an HOA.
I'm involved with a dedicated group of homeowners working with select state senators to propose and support legislation that will require HOAs to more completely disclose the financial and behavioral nature of the HOA to buyers and to protect buyers from undisclosed violations. We are also working on many other proposed legislation that will protect the interest and the rights of the homeowners, and limit the ability of an HOA to foreclose on a home. We are also working on requiring licensing and regulation of the HOA managers.
We ask for your support in our efforts to pass HOA reform legislation and that you include your voice to request that AAR and ADRE support these legislative efforts as well.
Thank you for your time and patience.