Monday, August 15, 2016

No Dogs Allowed [Due Diligence: Read Your HOA Docs!]

by Osman Parvez
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Public service reminder:  Read your HOA documents.  

The following references sections of the standard Colorado Real Estate Commission approved real estate contract to Buy and Sell. 

§ 7.3 Association Documents 
This is the seller's deadline to provide the buyer with association documents. Among other things, it should include the covenants, codes, and restrictions for the property.  It should also include minutes from board meetings and financials. 

§ 7.4 Association Documents Objection Deadline
This is the buyer's deadline to have reviewed the documents. If something is not acceptable, buyers must notify the seller on or before the deadline.

Occasionally, I'll find restrictions that just won't work for some buyers - like rules against certain pets or in this particular case, against motorcycles or commercial vehicles parked on the street. More commonly, I'll find discussions over nuisance matters, deferred maintenance, and potential special assessments.  

Buyers Beware. If available, carefully review the reserve study and analyze the financial track record of the association.

Remember: You're buying into a club where you're on the hook for maintenance and capital improvements.  Misspending and mismanagement is a huge red flag.  It's not just about the rules for fido and fifi.  

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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

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