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Adventures in Naples Real Estate: Home Owner Association (HOA) Documents

Posted on Thursday, February 16, 2012

Sometimes our clients think of Naples, Florida as the land of the gated community. With over 100 gated communities in our fair town the topic of Home Owner Association agreements (HOA) is relevant to single family residence buyers in these communities as well as condominium buyers. Our local paper even has a DAILY column regarding all things HOA.

Let’s take a look at what is going on here. In fact I will share some of my own adventures with these things over the past few months.

The first HOA documentation experience most buyers have is right in the middle of the excitement of purchasing a new property. Wow. Three days to review a bunch of legal words and financial stuff. Some buyers give the HOA docs a quick read and that’s that. But wait – there is important stuff in here.

Read it, know it, get legal advice and if you do not like it – back out. In fact, why do you think the three day review period is there anyway? To give you a chance to get a good look at these documents do it.

Buyers are sometimes surprised at what they find in the HOA documents. How about “no motorcycles” for example? Wow, really? Sure they may be a little noisy but many fine people ride motorcycles – why single them out? Anyway in my real world example with motorcycles the seller did not mention the “no motorcycle” provision in the HOA docs, and my motorcycle loving buyer pulled out of the deal after reviewing the HOA docs. Was the seller trying to pull a fast one? Nope, the seller just saw the docs containing  a perfectly fine provision amongst many in the docs. Read the docs! Could you imagine if my buyer went through with the purchase and pulled up to his new place on his Harley only to fine he could not keep it there? Ouch, read ‘em.
Here is another one – do you have the right version of the docs? Remember the seller may be providing these HOA docs to you. The seller may have moved in years ago and could there be a chance the seller has an old version of the docs and the current version may hold more information relevant to your buyer? Yep. What if your buyer read an old version, bought a place and later discovered the new version of the docs contained provisions he did not like? I don’t want to even think about it. Make sure the seller is providing the current version of the docs.
Let’s talk about reserves. Some find these financial statements too boring or nonsensical so why bother? My answer to my buyer is you are essential in business with your neighbors. Consider the HOA a business of all the folks in the HOA and you are collecting and spending money together for the common good. You had better know how the HOA stands financially – it is your new “business” – and how your money is going to be managed. For example, some banks will not lend money to purchase a property if the HOA reserves are too low. Get with a professional who understands financials – you have got three days to review so make good use of the time.
And yes, although rare, things can go really wrong in HOA’s.  Consider this recent story from the Naples News yesterday. ( According to the story “The former president and vice president of the Estero-based Lovers Key Condominium board pleaded guilty Monday to first degree grand theft charges for stealing more than $290,000 from a reserve account of the condo association, according to the State Attorney’s Office.” Wow. Know your docs, know your neighbors.
So what does all of this mean? In the middle of the excitement of purchasing a new property, take the time to read and understand your HOA docs. Stay focused, this stuff is important.
Share your thoughts – what have you seen with HOA docs during Naples real estate purchases?

No legal, investment, or tax advice is being given in this Blog.  Consult with legal, financial and tax professionals before acting on any real estate transaction.  Actual real estate price and sales results are subject to market forces and are not completely predictable. The writings of this Blog are intended for the sole use of our clients.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Mark Goebel, PA
REALTOR Coldwell Banker 5th Avenue South
Mobile: 239.595.3921
Facebook: NaplesBestAddresses
Twitter @mcgoebel
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