What are an agent’s duties regarding HOA documents?
QUESTION: A new agent in my firm told me that she was taught in her pre-licensing class that buyer agents are required to obtain copies of any declarations, restrictive covenants and bylaws of the homeowners’ association for properties their clients are purchasing and furnish those documents to their clients. Is that correct? What are an agent’s duties regarding these “HOA documents”?
ANSWER: The Real Estate Commission does not consider the furnishing of HOA documents to be an obligation of licensees, either listing agents or buyer agents. The Commission’s 2022-2023 Update Course materials on Material Facts include the following statement: “…brokers must disclose the existence of restrictive covenants, advise consumers on where to obtain a copy, and recommend consumers seek legal advice regarding the applicability of the covenants. It is not the broker’s responsibility to interpret the covenants.”
Another relevant NCREC publication is its Q&A brochure on Condos & Townhouses. One of the questions in that brochure is whether the closing attorney or real estate broker will furnish the homebuyer with a copy of the declaration, restrictive covenants and bylaws of the HOA. The answer given is “Not necessarily… If a real estate broker is assisting you in your purchase of a condo or townhouse, the broker may be able to obtain a copy of these documents.” This word choice suggests that it is not mandatory for brokers to obtain these documents.
Even though obtaining and furnishing HOA documents may not be required, there is no question that the existence of restrictive covenants is a material fact that a listing agent has a duty to discover and disclose. How will the listing agent know if those documents exist? Both the Exclusive Right to Sell Listing Agreement and the Residential Property and Owner’s Association Disclosure Statement require sellers to represent whether the property is subject to regulation by an owners’ association or governing documents. Listing agents should review both of those documents with their clients.
On the buyer side, investigation of restrictive covenants and other HOA documents during the due diligence period is specifically covered in the “Property Investigation” section of the Offer to Purchase and Contract. Buyer agents should definitely review that section with their clients. They should also advise their clients, preferably in writing, of the importance of obtaining and reviewing HOA documents, and then consulting with their attorney with any questions that may arise.
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