If you are purchasing residential real estate such as a home or condominium, it is important to understand any terms of sale that may affect your rights and obligations going forward. For example, many residential properties include mandatory membership in a homeowners association. These are nonprofit corporations that oversee the common areas of a housing or condominium development. These associations may also adopt restrictions on how individual homeowners may use their property.
Normally, a property developer creates a homeowners association and specifies membership as a condition of the initial sale of individual units. Because these initial sales are considered real estate securities, theNew York Attorney General's office regulates the establishment of homeowners associations. These rules require a developer to file a “declaration” specifying the terms and conditions governing any proposed homeowners association. This declaration is supposed to be filed before any individual units are sold. However, the Attorney General may grant a waiver for late filing “in the interests of justice.”
Avoiding HOA Foreclosures
As noted above, membership in a homeowners association is not optional. It is usually specified as a term of sale and as a restrictive covenant in any deed or transfer of title. Among other things, this means if a homeowner fails to pay any required homeowners association fees, the association may file a lien and even foreclose on the property. Even if the homeowners association does not foreclose, merely placing a lien on the property can restrict the owner's ability to sell or secure mortgage financing.
Homeowners associations must still comply with certain legal processes before attaching a lien or foreclosing. Here is arecent case in point from Queens. A homeowners association in Long Island City filed a notice of lien against the co-owners of a property over $5,200 in unpaid commons fees and related charges. The association moved to foreclose based on the lien. Queens Supreme Court denied summary judgment, however, because the homeowners association failed to establish its “standing” to bring a foreclosure action.
As the judge explained, a purported homeowners association must establish its legal status as such before pursuing foreclosure. Here, the association failed to do so. First and foremost, the judge said the association did not present any evidence it filed the legal declaration required by the Attorney General prior to the recording of the deed transferring title to the defendants' property. Although the original deed referred to such a declaration, the actual document was not presented to the court. The judge therefore said it was “unclear” whether the homeowners association was properly established.
Get Legal Help Before ClosingThe Attorney General's office cautions “there is no government agency that can help unhappy owners who are having problems with a homeowners association.” That is why if you plan to buy (or sell) a property subject to a homeowners association, you should consult with a New York real estate attorney who can advise you of the impact of any mandatory fees or restrictions on your ownership. Contact the offices of Waldhauser & Nisar, LLP, today if you would like to speak with someone about your situation.