We write a lot about things that should scare title agents, real estate attorneys and home buyers, like unrecorded liens and permits
-- but we really haven't touched on the subject of HOAs & Association Estoppels. So this week, I'm changing that.
How can a dissolved HOA come back to haunt a new owner?
Let's start by saying that associations are everywhere in Florida. In fact, 15-20% of all associations in the United States are right here in the Sunshine State. Associations are growing all over the country, not just Florida. Arizona, California, and Texas, just to name a few, are seeing massive growth of developments governed by a community association. Obviously, if you know the home you're closing on is in an HOA, you're going to order an HOA Estoppel or Certificate--that's common sense. What happens if that home used to be in an association, but isn't anymore?
Homeowners' Associations dissolve and reemerge more often than you'd think, for a variety of reasons. This is where you need to be vigilant:
- If you come across an HOA that has been dissolved, don't assume you're safe.
- In some cases, HOAs can be reinstated and start charging fees after closing.
- It's also important to note (especially for buyers) that we run into title commitments that have incorrect or outdated information about HOAs from time to time.
- Reinstated HOAs may go by a new name, have a new board and new bylaws.
It's possible a new homeowner would be happy--or at least indifferent-- to see ing an HOA reinstated without prior knowledge of its existence -- but I think it's best to know everything you can.
Got questions for our resident Association Estoppel expert? Email him at firstname.lastname@example.org.