I need some advice. I'm in escrow on a property in Hawaii. The property will be a vacation rental in a major tourist area and has two HOA associations. For simplicity, lets say one is $1200 a month and the second is $350. (One covers the main complex and one covers a larger joint complex it's a part of).
On all advertisements and MLS it was stated the total HOA fees are $1200. When my offer was accepted I had my realtor reach out to their realtor to confirm the amount, as this number is a huge factor in my COC analysis and I didn't think it was correct (I know the area well). Their realtor responded via e-mail confirming its total HOA responsibility is $1200... I receive the sellers disclosures two weeks later and low and behold its $1550.
I'm already in contract and the numbers are still very good so I don't want to cancel. My thought was to ask for a credit of $4200 basically asking them to pay the first year of their screwup.
What do you guys think? Should I consider filing a claim on the realtors insurance for providing factually incorrect information? I know they have insurance for this kinda stuff.
Would love some opinions.
I don't know if you can file a claim pre-closing. Now that you know the info is incorrect, you could possibly pull out (if allowed in the contract) or ask for a reduction in price.
Not sure about Hawaii, but most states where I've dealt with HOAs, it's standard in the contract that you have a right to review the HOA docs and exit the contract within x days if you don't like them for any reason, and listings usually say, Independently Verify, so not a lawyer but don't think you have "a claim on the realtors insurance," especially as you said you know the area well and didn't think it was correct. You can still ask for the reduction anyway and see if they feel responsible enough to cover.
I do have the option to walk away... I don't want to as I got a great price and the COC works for me.
It sounds like thats the only option though. I thought since I was given factually false and misleading information buy a licensed realtor i'd have some sort of repercussion besides just walking away... Guess thats why i'm not a lawyer lol
You have the right to walk away, that's the remedy for your bad info. You'd have a hard time justifying anything past that, because what would your response be when they asked why you continued forward once you got the correct info?
I'd def ask for the $ though, maybe if the realtor wants the deal bad enough they'll cough up the $ vs walking the deal over such small amount.
You haven't closed yet, so, there isn't any real recourse.
Also, MLS listings normally say that the information needs to be independently verified.
Problem is always with the owners. It's always difficult to get accurate taxes, maintenance fees, or common charges from them. It would be great if the listing agent put the correct information in there, but the problem always comes from the owner.
@Mike Verna I hold both a real estate license and an HOA manager license in Colorado. My HOA hat says - buyer is responsible for understanding the rules and fees. But my Realtor hat says I owe my clients the best information. As an HOA manager I frequently run into agents who are misrepresenting "facts" about the HOA because they don't do their homework (major peeve). The listing agent doesn't want this deal to fall apart; and by now they know that they didn't have their facts straight. Ask that realtor to sacrifice a little on their commission, ask the seller to give a little too. Submit as a due diligence objection. You won't know if you don't ask...
@Mike Verna Hi Mike, your predicament is not out of the ordinary. Almost always, this situation could have been avoided if the realtor (yours included) simply made a call to the property management company to verify what association fees are attached and also what is actually included in said fees. NEVER go by what is just listed on the property's MLS profile since it is up to the listing agent to fill out the correct info. If the property management company (big ones here are Associa and Hawaiiana) gives you faulty info, then you would have a stronger case.
In your case, the total association/maint fees were disclosed in the SRPDS. Like many people have mentioned, you have a right to cancel at this point even if you are past your J-1 inspection period if you are within your Disclosure Statement review period. Under Hawaii Real Property Contract Law you have 3 clean outs to any transaction: 1) J-1 Inspection Period (typically 7-12 days after receipt) 2) Seller's Real Property Disclosure Statement (SRPDS) review (typically 5-7 days) 3) Condo/Association Document review (typically 5-7 days upon receipt of docs). You are allowed to cancel the transaction under Provision O-2 of the contract as long as you are doing so within the timeframes you have negotiated.
If you were purchasing a SFH you would have another termination clause based on the survey done on the house. In your case, cancelling based on the condo doc or SRPDS review would be allowable.
Your options as I see them are: cancel and get your deposits back or ask for a credit for the new disclosure from the seller towards your closing costs or reduction in purchase price. You can try to chop up the credit whichever way you like but your realtor may not be willing to kick in part of his/her commission. Also, if its truly a great deal the seller may not be willing to negotiate.
Just my $.02, if you want more info feel free to private message me. Good luck!
Thanks everyone for your input. Based on what you guys said, I told my realtor to request the first year fees in the form of a credit. It was submitted with the repair requests since the inspection was done yesterday.
Within an hour they responded with a big NO and said if I don't like it to walk away and they were good with that... and their realtor didn't entertain the idea of digging into her commission. I want to walk away out of spite but even with the difference i'm looking at 15.75% COC so i'll swallow my pride lol
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