Rental Restrictions – The Third Rail of HOA Policies

Over the past 10 years, many Home Owner Associations have sought to amend their Governing Documents to restrict leasing.  This topic is so volatile, it could be called the “third rail” of HOA decisions.  In fact, one law firm’s PowerPoint presentation on this topic starts with the slide: Rental Restrictions: How to Best Create Dissension and Animosity in Your Homeowners Association.  … [Read more...]

How to X-ray an HOA #6 – Lawsuits, Judgments and Insurance

Pending lawsuits must be disclosed on Minnesota’s Resale Disclosure Certificate when the HOA is a party to it.  If you are considering a home where the association is in litigation, it is imperative to know what’s at stake.  Is someone suing the HOA over a $2,000 invoice or is the association suing the builder for a multi-million dollar construction defect?  Banks generally don't want to lend money for houses with pending lawsuits and may insist on a higher interest rate to do so.  If you are determined to buy in that complex, first consult an attorney for advice.  I also recommend that you … [Read more...]

How to X-ray an HOA #5- Delinquency Rates, Foreclosures and Short Sales

Buyers should be wary of cash-strapped developers or bank-owned buildings.  Developers and banks tend to lowball the cost of major repairs or improvements.  These groups may also fail to aggressively market the building or fix construction defects.  If the developer still controls the association, review the financial statements mentioned in Part 2 of this series.   Has the developer made the reserve fund deposits on time?  If instead, those payments have been deferred, try to verify the developer’s financial health and reputation.   If it has not already been disclosed, buyers should … [Read more...]

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