"Residents in CIDS commonly fail to understand
the difference between a regime based formally on rights,
such as American civil governments, and the CID regime,
which is based on restrictions. This often leads to people
becoming angry at board meetings and claiming that their
"rights" have been violated -- rights that they wrongly
believe thay have in a CID."
. . . Privatopia, p. 148
The newly devised Real Estate Department's Buyer Advisory, 5/02, contains a lot of "notices"for the buyer to be made aware. It also includes general notices about homeowners associations and a refernece to the limited documents that the buyer must receive, by law. It also contains a link to a national homeowner associaiton trade group, Community Associations Institute, CAI, that has for years been opposing reforms to restore civil liberties, justice and equal protect under the law to homeowners living in associations. The link to this page was removed by the department after only 1 month, because they couldn't stand the truth being told to homeowners.
It's astonishing that the Department recommends this private organization that for years has been telling the public, the media and the legislature that it's an educational organization and not, since 1992, a business trade organization.
The Department, as of October 2002, has removed all references to CAI, but has still refrained from mandating a full disclosure notice.
Here's what the Commissioner said in the February Real Estate Bulletin:
"Homeowners association regulation disclosure --
"As you undoubtedly know, homeowners associations (HOAs) are not regulated by anyone. Repeated attempts to pass legislation giving one state agency or another the responsibility for regulating HOAs have failed.
"Many homeowners purchasing homes in a subdivision regulated by a homeowners association do not realize this, and may believe they can turn to some state agency or other regulatory entity when they encounter a serious problem with the association to which they belong. In fact, other than attending meetings of the Board of Directors and using all their powers of persuasion to get their way, about their only recourse is to hire an attorney to deal with the association.
"Is this a material fact that should be disclosed to a prospective buyer? You bet it is. Are licensees making this disclosure? Probably very few are. Don't run the risk of being sued; disclose this fact to all potential buyers when the property falls within the jurisdiction of a homeowners association.
"Hope to see you at the Prescott Arizona Association of Realtors meeting in March. I’ll be on a panel and no holds will be barred."
Yet, the "full disclosure" form is rejected by these parties, including the legislature.
Arizona Association of Realtors (AAR) and Buyer's Rights
However, the above only applies if the HOA is less than 50 units. In paragraph (c) this wording is missing! Instead, the buyer is only informed that the seller will submit his name and address the HOA as a new buyer. It does not inform the buyer that:
1. the HOA is required by law to provide this information.
2. the buyer has the same 5 days within which he can cancel the contract.
Further, these contracts are provided by the real estate trade association and not approved or reviewed by any state agency, which is not disclosed to the buyer. This would make the buyer assume he couldn't change anything on the contract and not ask for a longer period of time to review these documents. Some of these documents can run over 100 pages and would require a lawyer to properly review.
I congratulate the AAR for the improvements, but they are still far too short of what can be done to protect a buyer, since AAR is well aware of the problems with HOAs.
Oct. 21, 2000