Disclosure required regarding possible assessment from HOA?

Question

Hi fellow investors!  Got a question that I'd love input on.

I purchased a condo in Florida in February of this year.  It is in a small 8-unit community that consists of three buildings:  2 duplex-style buildings on the left and right, and an L-shaped 4-plex in the middle.

After purchasing, I asked for and received the past 7 years of HOA documents (as this is the right of all property owners according to bylaws).  While reviewing them, I learned that both of the duplex units were experiencing foundation issues/sinking floors over the past couple of years. The board members had visited the affected units to see what was going on and this was a known issue.  The seller of my unit was one of the board members and was well aware.

Fast forward to now:  I recently got a notice from the HOA that a probable special assessment will be coming to each homeowner to pay for the foundation repairs for these units.  The HOA had tried unsuccessfully to get insurance to pay for repairs, but insurance has denied the claim.

So my question is whether or not this is something that should have been disclosed legally, or whether it is simply a case of "buyer beware" and now it's my problem to deal with $$$$$$$$$$.

Anyone have insight?  My husband thinks I need to consult an attorney which, of course, is also a good idea and I am considering but I thought I'd touch base here beforehand to find out if the "hive mind" has any collective words of wisdom or experience that would apply.

Thanks!

Mike McDermott · Answer

Did you purchase "loss assessment coverage" with your condo insurance? That coverage may handle this type of assessment.

Russell Brazil · Answer

A seller or property owner can not predict a special assessment that might occur 7 months after they sell the property

Jay Hinrichs · Answer

you need to assess if the seller has any money and do you want to spend thousands chasing them for years even if your right and have the right to sue.. or just pony up the money and pay for the fix..

although home inspection should have got something that was glaringly bad and of course you should have read the docs prior to closing that you got from HOA...  Especially in FLA or TX were foundation issues are more common than other areas of the country.

Patti Robertson · Answer

Normally you get the resale package BEFORE closing, not after.  I can’t speak to TX law, but in VA a buyer has 3 days from the day of receipt to terminate the contract based on what in in the documents.  Include in this report is a reserve study, which outlines the required repairs an expenses for the next 10 years.  This study has to be completed every 5 years by an engineering firm licensed to do them. In VA, and I would guess in every state, it is illegal to not disclose a latent defect.  ) A latent defect is defined as a fault in the property that could not have been discovered by a reasonably thorough inspection before the sale. Did you have an inspection or did you waive this? Why didn’t you get the documents before closing?

Connor Heim · Answer

Sam, there is no backing out, as I already purchased this in February.

Connor Heim · Answer

Patti, I did have an inspection, and those units that are affected are not my unit.  My inspector did not inspect the other 7 units in the condominium community.  He inspected my unit only.

I did receive a seller's disclosure and it said:  "The board is reviewing repairs needed in Units D, and A/B.  Reserves should be adequate."

There is no required reserve study that I know of in Florida.  The documents I received after the sale are the 7 years of meeting minutes that any *owner* may request.  I was not privvy to these documents before becoming an owner.

Max -- the seller's disclosure said only "The board is reviewing repairs needed in Units D, and A/B. Reserves should be adequate."   There was no section to discuss the foundation, specifically.

Russell - this is not about prediction, but rather whether the extent of the disclosure provided at the time of sale was adequate.

Jay -- exactly.  That's what I'm trying to determine.

Tom -- right.  Foundation issues not related to my unit.  I think the assessment will probably be maybe $10K or 15K?  Hard to know for sure.

Sam Shueh · Answer

What does it take to back out of a contract?  What is the assessment cost like?  Is it a few K or 10s K?

What is the condo worth to you?

Sam

Disclosure required regarding possible assessment from HOA?

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