HOA Documents – valuable info or just more paper wasted?

As a part of real estate purchase contracts in Texas, there is a requirement to disclose whether a property is located in an area with a mandatory homeowner’s association. With this disclosure comes a need to provide the HOA documents which are relevant to a purchase because 1) guidelines within the HOA documents would impact a potential buyer’s use of their home and their property and 2) HOAs in Texas do have the right to lien and even foreclose on homes for non-payment of dues. It can be serious.

Fortunately, there is a separate addenda that can be added to the contract to address getting the buyer copies of the HOA documents for review before they fully sign off on the purchase. On this form, ordering of the subdivision’s restrictions, bylaws, rules, and a resale certificate (collectively known as HOA Documents) is outlined. The cost of ordering these HOA documents is most commonly paid for by a seller, but it is all negotiable and can be paid by the buyer. Especially in the case of cash purchases, a buyer may elect not to see copies of the restrictions and this can be spelled out as well.

There are strict guidelines for delivery of these governing documents, and failing to get the HOA documents as outlined by the contract can give a buyer the opportunity to terminate a contract and be refunded earnest money at any point prior to closing. This is huge and why sellers should pay close attention to delivery of this information. As a buyer, you should carefully read through the HOA documents as you have seven days to let a seller know if you object to any item contained therein and wish to terminate the contract.

Fun facts about HOA restrictions

• Resale Certificates outline any outsanding balances, liens, lawsuits involving the HOA, upcoming special assessments, etc. and are only good for ninety days
• HOAs cannot prevent homeowners from installing solar panels for aesthetic causes so you and your neighbors can enjoy the benefits of community-shared solar. If you’re not familiar with it, click this link to read more details.
• Architectural Control Committees often make up part of the HOA and help to regulate consistent building appearance and maintenance – significant building plans or changes must be submitted to this panel for review.
• HOAs cannot prevent display of flags
• HOAs can assess fines for excessive yard décor
• Most common HOA fines are for overgrown landscaping (grass is too high) or failure to obtain approval on changes (paint color, etc.)

image courtesy of gosheshe