BIC TIP #1162: HOA Pitfalls for Buyers and Agents

Ah, the dreaded HOA. Stephen Long calls the homeowners association the last unregulated part of the real estate industry, and anyone who has fought a fence approval knows exactly what he means. Within the confines of the law, an HOA can do pretty much whatever it wants. That is exactly why brokers need to handle HOA information with care, because the existence of an HOA is material.

An HOA Is a Material Fact

Whether you are the listing agent or the buyer agent, the existence of a homeowners association is something that matters to a reasonable buyer. It can affect what they can build, park, paint, rent, or fence. It can affect their monthly budget. It belongs in the conversation from the start, not as an afterthought at closing.

Gathering Documents Is Great. Interpreting Them Is Not Your Job.

Many brokers go the extra mile to retrieve the HOA disclosures, covenants, rules, and regulations for their buyers. Stephen applauds that effort. But he also offers a warning: those are legal documents you are not trained to interpret.

When a buyer asks, “Can I put a shed back there?” or “Can I rent this out?”, the safe answer is not your best guess after skimming the bylaws. Telling a buyer what the documents mean puts you in the position of giving legal advice, and that is not a position you want to be in.

You Might Miss Something

There is a second risk. If you take on the job of finding every HOA document, you could miss some. Amendments, supplemental declarations, and separate rules can be scattered around, and a buyer relying on your incomplete stack could make a decision without the full picture.

The goal is for the buyer to have all the information they need to make a good decision about the property. If you are handing over documents, make it clear they may not be the complete set, and point the buyer toward the right professional for the rest.

The Practical Takeaway

Disclose the HOA, share what you have, and know your lane. If your buyer has concerns about what they can do with the property or what the rules really say, they should talk to the real estate attorney before they are locked in. Your job is to make sure they ask the question. The attorney’s job is to answer it.