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“By failing to prepare, you are preparing to fail.” – Benjamin Franklin

There is growing concern that many homebuyers are not reading or clearly understanding the Home Owner Association’s (HOA) Covenants, Conditions and Restrictions (CC&Rs), and other governing documents prior to completing their purchase.

Yet state law, A.R.S. § 33-1806(A)(3)(h), requires that they sign and return to the HOA within 14 days a statement that provides:

I hereby acknowledge that the declaration, bylaws and rules of the association constitute a contract between the association and me (the purchaser). By signing this statement, I acknowledge that I have read and understand the association’s contract with me (the purchaser). I also understand that as a matter of Arizona law, if I fail to pay my association assessments, the association may foreclose on my property.

While a homebuyer’s failure to read or understand the HOA’s governing documents does not always result in problems down the road, when it does, the repercussions can prove challenging and affect their enjoyment of the home they purchased.

Suppose the homebuyer’s beloved family dog is 25 pounds over the weight limitation according to the HOA’s rules; or maybe their child who dreams of being a basketball star cannot practice at home because the CC&Rs contain rules prohibiting basketball hoops. These are real problems that can negatively impact the home buying experience.

Fortunately, the majority of derailing surprises and challenges homeowners face can be prevented if they have a thorough understanding of the HOA’s rules and regulations before purchasing their home.

Although HOA rules can be confusing and differ from one HOA to another, there are resources available to homebuyers that can prove helpful.

Real estate attorneys and document review companies can help ensure that homebuyers have received all of the information required to be conveyed to them by the HOA, and they can also provide a summary of pertinent information contained in the governing documents that may impact a homebuyer’s use of the property.

Laurelle Adrian operates The HOA Report, a document review company, and says, “It’s not just about reducing liability for real estate agents, it’s about protecting their clients from emotional, legal, and financial surprises.”

Associate Broker and Branch Manager Connie Manzano recently assisted an associate who experienced a delay in close of escrow due to a buyer not receiving all of their HOA documents.

Manzano explained, “The HOA process has been disjointed for a long time. Buyers frequently struggle to read and understand the HOA documents within the limited time they are provided, and they are often unsure if they have received all of the required documents.”

It is for this reason that Manzano encourages buyers to either set aside time to thoroughly review their HOA’s governing documents, or hire a third party professional to do so on their behalf.

While Manzano encourages agents to inform buyers of the importance of understanding all applicable use restrictions, she correctly advises agents not to try and interpret or summarize CC&Rs on their own, even if they are confident in their ability to do so.

The key to a successful transaction is identifying and resolving issues before they become a problem. One important step to achieving this goal is ensuring that homebuyers fully understand the HOA’s rules and regulations before finalizing their purchase.