Representing Buyers of Properties with a Homeowner’s Association
November 16, 2017 |
With Baby Boomers retiring and Millennials entering the real estate market, more buyers are purchasing condominiums or properties with a homeowner’s association. These buyers are looking to avoid the routine maintenance and upkeep that comes with owning a home. These properties are subject to additional restrictions of which buyers should be aware. Below are some tips for representing condominium buyers or buyers of property with a homeowner’s association. Because everyone knows agents offer more than just buying and selling.
1. Buyers should obtain copies of deed restrictions
Deed restrictions restrict the use of private real estate. To be enforceable they have to be recorded at the County Recorder’s Office where the real estate is located. Deed restrictions “run with the land” and thus affect the title to the real estate for not only the current owner but future owners. Deed restrictions oftentimes have provisions to protect the character and uniformity of a neighborhood. Examples are restrictions on sheds, satellite dishes, fencing, and landscaping. Consequences for violating deed restrictions can be costly, including fines and attorney’s fees.
2. Buyers should obtain copies of Condominium Declaration, Association By-laws, and Rules
A Condominium Declaration is a document that is filed with the County Recorder’s Office where the real estate is located. It defines layers of ownership (what is owned by the condominium owner and what is owned by the condominium association). The Declaration, By-laws, and Rules will set out the responsibilities of owners and the responsibilities of the association. Common examples include insurance requirements, restrictions on parking, and leasing. The By-laws will provide how the board of directors is elected and their authority. The Rules will be those day to day guidelines to which all owners must adhere. Some rules can be very restrictive, governing when decorations may be posted on a unit or even the color of window coverings.
The Fifth District Court of Appeals recently issued a decision in favor of a homeowner’s association that issued fines against an owner in violation of the association’s rules. The homeowner illegally parked a commercial vehicle on the owner’s property. The owner didn’t have actual knowledge of the parking restrictions. However, the Court ruled that the owner had constructive notice of the rules since the declaration was recorded with the County Recorder’s Office and a public record. That declaration gave the association the authority to adopt rules. The Court concluded that the owner should have exercised due diligence in reviewing the public record. The owner also should have made inquiry of the association for any other rules or guidelines.
Additionally, the Court ordered the owner to pay the association’s attorney’s fees and costs incurred from enforcement of the parking restriction. The decision illustrates the importance that buyers fully understand the restrictions applicable to real estate they purchase. This goes for condominiums and properties with a homeowners association. Agents should always recommend their clients obtain the materials discussed above so their clients are making an informed decision before purchasing any real estate. More information on the decision can be found at Heather Lake Assn. v. Billiter, 2017-Ohio-8387.