During the home buying process, one area of concern is always whether the property is or is not part of a property owner's association. And, if it is, what does that mean for the buyer? Below are answers to the most commonly asked POA questions:
Q: What is a property owner’s association?
A: Real estate developments often have common areas to own and maintain, architectural review boards, dues, assessments, etc. The tasks and duties associated with these subdivision characteristics are managed by an association of the owners. The association, often incorporated, may be self-managed or professionally managed.
The Act obligates a seller to obtain and provide to prospective purchasers a packet of information, the contents of which are specified by law, in order for a buyer to evaluate the association and the obligations the buyer will have after closing.
Q: What should a property owner association packet contain?
A: The Act specifies the contents of the packet. For example, the name of the association, pending assessments or expenditures of funds, a statement of fees including assessments, a current reserve, study report, current budget, notice as to any pending law suits against the association, insurance coverage information, a statement whether the lot and house are in violation of association rules, copy of the declaration, bylaws, and rules and regulations, minutes from any board of directors or association meetings for six months preceding, etc.
Q: What if I receive a POA packet from a seller that is either old or incomplete?
A: There is a Virginia case that holds even an incomplete packet starts the three-day review period, so if the packet is not complete you will need to cancel and re-start the process in order to get a complete packet, or seek an attorney’s advice regarding a mutual extension to the three day review period so a complete packet can be obtained.
Unfortunately the law is not clear regarding how current the disclosure packet must be. The Act simply provides that it must be current as of the date noted on the packet itself. If you receive an old packet (in my view more than six months old or not year current) then I would recommend you immediately cancel and re-start the process unless you have a contractual provision permitting you not only to request an update (you always have a right to request an update) but to terminate based on that update (you do not have this right unless it is agreed in the contract).
Q: Can I cancel the contract if I do not approve of the POA disclosure packet?
A: Yes! The Act permits a purchaser to cancel within three days of the date of receipt of the disclosure packet. Bear in mind that unless the contract specifies to the contrary, the receipt of the packet by your agent or your agent’s firm may trigger the three-day window.
You do not have to have a reason to cancel. You may cancel and state no reason whatsoever, and there is a Virginia case that holds you may have a pre-textual (read fake) reason. And, you may even purchase a home in the same association at a later date.
Are you looking to start the home buying process? Email us at concierge@lizmoore.com, we'd love to help! Or, click below to download our free Home Buyer's Handbook.
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