Seller did not disclose HOA fees

Member since 2018 · 208 posts · 90 votes

I am under contract on a home, where the seller did not disclose any HOA fees (claimed there was none), and now in the appraisal report obtained from the bank, I see there is HOA dues. It is not much, but still comes with all that is HOA (including incidental fees, transfer fees, etc..).

Any suggestions how to proceed? Should I back out because of that discrepancy? Move forward? Negotiate with seller?

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Cassi Justiz

Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes

Are you working with a realtor? You may have some protections if you used a state issued contract.

At least in my state, our contract and disclosures form has some basic protections built in for the buyer should the seller intentionally not disclose something of that nature.

You will have to decide what the house is worth to you with the HOA fees included. Do your original numbers still work? I personally won't buy a property with an HOA, so for me it would be a really quick deal breaker.

But if you really like the property and the numbers still work, you could request to negotiate a discount on the price or have them pay for some of the HOA fees and dues (if that's allowed). I would also make sure you get a really thorough inspection. If they didn't disclose the HOA and HOA fee, it would be wise to do your due diligence on the actual property.

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Cassi Justiz
Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
7y
Are you working with a realtor? You may have some protections if you used a state issued contract.
At least in my state, our contract and disclosures form has some basic protections built in for the buyer should the seller intentionally not disclose something of that nature.
You will have to decide what the house is worth to you with the HOA fees included. Do your original numbers still work? I personally won't buy a property with an HOA, so for me it would be a really quick deal breaker.
But if you really like the property and the numbers still work, you could request to negotiate a discount on the price or have them pay for some of the HOA fees and dues (if that's allowed). I would also make sure you get a really thorough inspection. If they didn't disclose the HOA and HOA fee, it would be wise to do your due diligence on the actual property.
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
Is it an actual HOA, or an HOA like entity that exists in the covenants of the subdivision? Does your state have any laws regarding the disclosure of HOAs and what do those law state? Are you sure tha appraisal is correct? I dont even know where that info would be on an appraisal.
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Brian Ploszay
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
7y
There are many negative issues that one can discover after getting under contract with any property. Good job that you discovered it. A similar issue happened to a client years ago when we were not told the property was in a flood plain. The resulting insurance premium was significantly more. We discovered it and negotiated a minor reduction in price to pay for that premium for three years.
The omission of this HOA fee is significant because it is a recurring fee that adds up as long as you own the place.
I think you stated your three options, so pick the one that makes sense.
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Heshel Mangel
OP
Member since 2018 · 208 posts · 90 votes
7y
@Cassi Justiz What type of protections are you referring to? The ability to back out of the contract or something more than that?
I always told myself I wouldn't get involved in any HOA properties, as it takes the control out of my hands. It is a cheap HOA though and they do help maintain the property values of the neighborhood.
Thanks for the advice!
@Brian Ploszay It's not even that significant of a hit right now, but who knows? Maybe it'll go up in a year..I just don't like that type of lack in control I have over the numbers and the costs.
@Russell Brazil Yes, it is an actual HOA. It was found by the title company as well.
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
7y
Every property I’ve purchased in an Hoa was obvious for a couple reasons. There’s a check box in state realtors contracts that says something to the effect that your use of the property is subject to covenants or restrictions (cc&r’s). I’ve also have to sign a separate document saying I’ve read those documents and viewed the financials and I’m ok with them.
Multiply the monthly Hoa fee by 60 or 120 (5-10 years) and if you wouldn’t have bought at that price move on. It kinda sounds like you’re looking for a reason to bail. In most cases the fees are lower than most utilities and yet nobody researches the utility history for their home purchase. (Short of MF)
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