Arizona Association of Realtors and HOA Home Buyer's Rights
. . . Privatopia, p. 148
"Residents in CIDS commonly fail to understand
the difference between a regime based formally on rights,
such as American civil governments, and the CID regime,
which is based on restrictions. This often leads to people
becoming angry at board meetings and claiming that their
"rights" have been violated -- rights that they wrongly
believe thay have in a CID."
I AM NOT A LAWYER AND I AM NOT PROVIDING LEGAL
ADVICE. YOU SHOULD CONSULT YOUR OWN COUNSEL FOR LEGAL ADVICE.
AAR Revised Purchase Form Improves Buyer Protection
The latest Arizona Association of Realtors residential purchase form, 5/00, provides an improvement for buyers of an HOA controlled property. This document, expanded from 8 to 9 pages, now specifically informs a buyer, on page 5 under Disclosures, that he/she has 5 days within which to cancel the contract after receipt of HOA information. This is an important improvement over the prior contract.
However, the above only applies if the HOA is less than 50 units. In paragraph (c) this wording is missing! Instead, the buyer is only informed that the seller will submit his name and address the HOA as a new buyer. It does not inform the buyer that:
1. the HOA is required by law to provide this information.
2. the buyer has the same 5 days within which he can cancel the contract.
Further, these contracts are provided by the real estate trade association and not approved or reviewed by any state agency, which is not disclosed to the buyer. This would make the buyer assume he couldn't change anything on the contract and not ask for a longer period of time to review these documents. Some of these documents can run over 100 pages and would require a lawyer to properly review.
I congratulate the AAR for the improvements, but they are still far too short of what can be done to protect a buyer, since AAR is well aware of the problems with HOAs.
Oct. 21, 2000
Limited Recourse & Protection
If, after you bought your HOA controlled property you begin to experience
HOA problems not to your liking, or you feel violates your rights, your course
of action is very limited! The common solution you are offered is: "You can always
If you plan to buy a home in an HOA controlled property you should take steps to
protect yourself before you buy:
- Ask for information from the
seller and agent that you feel is material to your decision to buy, and which you
will rely on. This information must be truthful and accurate. If not, you may
have grounds for misrepresentation and for "making false statements" and thereby
be able, through the courts, to invalidate the purchase contract.
- Ask for copies of the articles of incorporation, bylaws and rules & regulations, all
of which the seller should have or could obtain from the HOA. You must be provided with certain documents
from the HOA or seller as required by law (ARS 33-1806). However, you do not have a clear,
well-defined, enforceable "review period"
in which to cancel the purchase contract if you are not satisifed with these HOA
documents. (See (5) below).
- Review them. Use
qualified people to explain them to you.
- The State of Arizona does not review
or approve any such documents! These documents will vary from association
to association! And the enforcement of the HOA rules and restrictions as well as the management of the an
association will vary.
- Ask the real estate agent and seller about any problems in the HOA or with
the HOA's decisions or actions. You want to know about any and all problems
that they have knowledge of and not just any the seller may have had. Have
your agent put these requests in writing in the purchase contract.
- In Arizona licensed real estate agents/brokers are required to "deal fairly
with all parties" and to disclose information "that materially and
adversely affects consideration to be paid".
- Also, the purchase form used is probably
an 8 page, small print AAR (Arizona Association of Realtors) form which is not reviewed or approved by
the State of Arizona. AAR is not a governmental agency and its form can be modified,
especially with respect to HOAs. Page 5 of this form contains information relating to ARS 33-1806 that
requires the HOA or seller to provide certain information to the buyer. The buyer and seller are required to initial
this page and the agent has no responsibility whatsoever regarding the
seller's or HOA's compliance.
- Page 6 of the AAR purchase contract, under Buyer Reasonable Disapproval, has
wording that allows you to cancel the contract "If buyer reasonably disapproves
of items as provided herein ..." Caution is urged here -- seek legal
interpretation. It appears that this section of the AAR form relates to physical
items that the seller can remedy. It does not contain wording similar to that found
on securities prospectuses and HUD planned unit development disclosures; such as
"You have 10 days to review the HOA documents within which time you may cancel the purchase
- Your real estate agent probably had you sign an Agency Disclosure agreement
whereby he/she pledges his loyalty, honesty and fiduciary duties to his client - you.
You rely on your licensed real estate agent and his pledge to protect
you. This is another AAR form and not a governmental form.
- Since your agent is aware that there are problems with some HOAs, your agent should
be protecting you by advising you to take the above steps.
- Ask yourself: "Do I want to live in this neighborhood under these
Today, the courts hold buyers to the purchase contract even though the buyer has
not seen or reviewed these important documents. The state does not review or
approve HOA articles of incorporation or by-laws, which vary from association to
association. Perhaps, today in Arizona, you do need legal advice to protect you.
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