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Friday, 24 May 2019
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This Old House - Do-it-Yourself

Ask the HOA Expert: Using HOA Contractors, Agent Specializing in HOA, and Building Restrictions

Written by Posted On Monday, 11 March 2019 05:00

Question: Can a homeowners association force unit owners to use its contractor to repair unit interior damage when the HOA is responsible for repairs? In this case, water seeped in due to failed waterproofing and damaged carpet, drywall, paint, baseboards and insulation. The HOA is paying a contractor to do both exterior and interior repairs but I do not want to use this contractor. I’ll accept the HOA’s cost estimate to do my interior repairs but want to get my own contractor.

Answer: The reason the HOA wants one contractor is it’s easier, faster and cheaper to use one contractor for all repairs. But unless interior repairs involve things like structural repairs (safety issue) or mold remediation (health issue) which can adversely impact neighboring units, individual unit owners have the right to take care of interior repairs using their own contractor.

Question: I am a real estate agent specializing in HOA property. In the past, I was used to seeing a charge for resale disclosure packages of around $100. Yet, recently I’ve seen charges up to $250. Isn’t there some sort of regulation that prohibits price gouging?

Answer: HOAs and their management companies are entitled to a reasonable charge for producing information related to HOA home and unit sales. This should not be a profit center for a self managed HOA although it is usually a profit center for an HOA management company. The board needs to make sure that charges are commensurate with the actual work required and not allow the management company to set any price it wants, especially if it could hamper sales.

That said, some states have more complex resale disclosure requirements than others so time requirements to fulfill them varies from state to state. Also, Fannie Mae and Freddie Mac (the two entities that underwrite the majority of condominium mortgage loans) enacted more stringent underwriting requirements in 2007 and 2008 which expand lender verifications of HOA reserve studies, renter occupancy, delinquency rates and insurance. This has placed additional burden and time on boards and managers to comply with resale disclosure so an increase from $100 to $250 may be entirely reasonable. You need to inquire on a case by case basis what the justification for the additional cost is.

Question: We bought a lot in an HOA and were given a copy of the recorded governing documents prior to closing. We read them carefully before we closed the sale. Several months later, we submitted house plans to the Architectural Review Committee (ARC) for approval and were informed that we could not build any structure within 30 feet of the back of our property line. This restriction was outlined in the ARC’s “Landscape Guidelines”, something we were not provided a copy of before closing. As it turns out, the standard rear setback is 15 feet but a 30 foot restriction applies to a few lots (including ours) to maintain a “view corridor”. Can the HOA really enforce this kind of selective setback restriction on us?

Answer: It depends. You apparently were aware that there were HOA architectural restrictions since you knew to submit plans to the ARC for approval. Did you not think to inquire about what those restrictions might be before closing? On the other hand, the seller most certainly knew about the special setback on this lot. If it was not disclosed, you have an issue with the seller. Finally, any setback or other restriction that applies to selected lots should be made part of those lots’ title record so prospective purchases can be made aware of it prior to closing.

You likely have a strong case in your favor to get the restriction overturned. However, you may be fighting your neighbors who will get their view blocked as well as the HOA to get it done. You should retain an attorney that specializes in HOA law to help you sort it out.

For more innovative homeowner association management strategies, subscribe to www.Regenesis.net

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Richard Thompson

Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues.

Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at rich@regenesis.net.

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