When buying or selling a property in an HOA-controlled community, obstacles like unpaid fees, fines, or compliance issues can present significant hurdles. Homeowners Associations (HOAs) can sometimes make or break a deal due to their regulations, fees, and enforcement actions. However, with a bit of creativity and strategic thinking, you can work through these obstacles without needing to hire an attorney or incur additional costs.
Understanding HOA’s Role in Real Estate Transactions
Homeowners Associations play a crucial role in maintaining community standards. Their responsibilities include enforcing property rules, collecting fees, and maintaining common areas. While this can be beneficial for the neighborhood, HOA rules often come with fees and requirements that can complicate real estate transactions. For instance, outstanding HOA fees or violations could create roadblocks for a property sale, preventing the deal from closing on time.
When facing HOA obstacles, the key is to approach the situation with a calm, proactive mindset. Rather than letting these obstacles derail your transaction, consider negotiating directly with the HOA or working within their system to resolve the issue on your own.
Step 1: Contact the HOA Board Directly
The first step in resolving HOA-related issues is to approach the HOA board directly. Many times, a quick conversation can lead to a resolution that benefits everyone involved. For example, if there are unpaid fees or fines, consider negotiating directly with the HOA to reduce the fees in exchange for a prompt resolution.
HOAs are motivated by the same thing that buyers and sellers are: keeping properties in good standing and maintaining the neighborhood’s value. They are typically open to negotiation, especially when you can demonstrate that settling the issue is in everyone’s best interest. Many HOAs would rather reduce fees or offer payment plans than risk losing a paying member and leaving a property unresolved.
Step 2: Research HOA Policies and Fee Structures
Before you approach the HOA, make sure you understand the specific policies and fee structures involved. Most HOA’s governing documents, such as their Covenants, Conditions, and Restrictions (CC&Rs), provide detailed information on what fees are required, how they’re assessed, and how disputes can be resolved. By familiarizing yourself with these documents, you will be better equipped to make a compelling case for reducing fees or creating a payment plan that works for everyone.
Knowing the ins and outs of the HOA’s system will allow you to approach them confidently and propose realistic solutions. For example, some HOAs offer fee reduction programs or financial hardship plans for homeowners struggling to pay, and you may be able to leverage these options to get your deal back on track.
Step 3: Offer a Payment Plan, Installments
If the HOA fees are unpaid or past due, but you can’t pay them all at once, consider proposing a payment plan. Many HOAs are willing to negotiate with homeowners or buyers to settle outstanding fees over time. A well-structured payment plan can prevent the deal from falling through and ensure the HOA is paid in full without causing undue financial strain.
To propose a successful payment plan, outline a clear schedule for when payments will be made and how much will be paid each time. Be sure to include any interest or penalties that may apply, and show how this plan will benefit the HOA by providing steady income and resolving outstanding issues.
Step 4: Resolve Violations or Property Issues
If the property has violations, such as unapproved modifications or failure to maintain landscaping, work to resolve them before the sale goes through. Most violations can be corrected relatively easily and quickly, without involving an attorney. Start by reviewing the violation notice from the HOA and take action immediately to fix the issues.
For example, if the property has an unapproved fence, removing or modifying the fence to comply with HOA guidelines can often be completed in a matter of days. If the issue is related to property maintenance, such as overgrown lawns or unsightly trash, clearing the area and maintaining the property according to HOA standards can resolve the issue. By addressing violations yourself, you demonstrate a willingness to comply with the HOA’s regulations and ensure the property is in good standing. Once the issues are resolved, the HOA will be more likely to approve the sale and close the deal without further delay.
Step 5: Understand and Leverage HOA’s Motivation
HOAs want to maintain property values and keep the neighborhood in good standing. If you can present a situation where resolving the issue benefits them as well, you are more likely to get their cooperation. Whether it’s paying overdue fees or fixing property violations, the goal is to show the HOA that working with you will result in a positive outcome for the community. According to Forbes Real Estate, “HOAs are often more flexible than homeowners think, especially when there’s a clear path to resolving issues. A cooperative approach is typically more effective than a confrontational one, as HOAs want to ensure a smooth transition of ownership.”1
Step 6: Make Use of Your Network and Resources
If you’re dealing with significant unpaid fees or difficult HOA situations, you may find it helpful to reach out to others in your network who have experience with HOAs. Local real estate investors, agents, or even fellow homeowners may be able to offer guidance on how they’ve successfully navigated similar situations. Online forums and real estate groups can also provide helpful advice and insights into how others have handled HOA obstacles in their transactions.
The bottom line
When HOA obstacles threaten to derail your real estate transaction, don’t give up. By taking a proactive approach—whether that means negotiating directly with the HOA, proposing a payment plan, or resolving violations on your own—you can often find a creative solution that works for everyone. With some patience and persistence, you can overcome HOA hurdles and close your real estate deal smoothly and successfully.
By understanding the HOA’s perspective and utilizing DIY methods to resolve issues, you can save time, money, and frustration while ensuring the deal moves forward without involving costly legal fees or drawn-out delays.
- (Source: Forbes Real Estate, “How To Successfully Deal With Homeowners Associations”) ↩︎