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- It’s also important to note (especially for buyers) that we run into title commitments that have incorrect or outdated information about HOAs from time to time.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 seeing 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 us at firstname.lastname@example.org.