Homeowners associations (HOAs) exist as a means to maintain property values and community standards. However, HOAs can also become obstacles to homeowners looking to sell their properties. In particular, HOA litigations and other legal actions that may hinder property sales. Fortunately, in many cases there are viable legal options available to homeowners facing these challenges.

HOA Litigation and Its Impact on Property Sales

When an HOA engages in litigation, property values within that HOA could fall, affecting the ability of homeowners to sell their units at the market rate. This occurs for several reasons:

1. Disclosure requirements: Legal obligations under Section 720.401 of the Florida Statutes. require sellers to disclose pending HOA litigations to a prospective buyer in a real estate transaction. Knowing that an HOA is tied up in a potentially costly litigation may deter many prospects and make it difficult to sell the property.

2. Financing difficulties: Lenders may be reluctant to approve mortgages for properties when an HOA or (condo association, COA) is involved in litigation. This may end up limiting the pool of potential buyers to only those willing to pay in case.

3. Uncertainty: Ongoing litigation creates uncertainty about future assessments, repairs, or rule changes, making buyers hesitant to go through with a transaction.

4. Stigma: Properties involved in litigation may develop a negative reputation in the real estate market and are less likely to be shown or promoted by real estate agents.

Legal Action Against HOAs for Hindering Sales

Homeowners who believe their HOA is unfairly preventing them from selling their property may have grounds for legal action. Potential legal claims may include:

1. Breach of fiduciary duty: HOAs have a responsibility to act in the best interests of all members. Engaging in unnecessary litigation or actions that significantly impair property values could be seen as a breach of this duty.

2. Violation of governing documents: If the HOA’s actions contradict its own bylaws or CC&Rs (Covenants, Conditions & Restrictions), homeowners may have grounds for a lawsuit.

3. Tortious interference: If an HOA’s actions directly and unjustifiably interfere with a homeowner’s ability to sell their property, this could be grounds for a tort claim. This is especially true if the obstruction can be shown to be intentional.

Other HOA Tactics That Can Hinder Property Sales

Beyond litigation, HOAs may employ other methods that make it difficult for homeowners to sell:

1. Excessive assessments or fees: Pending special assessments and high dues can make properties less attractive to buyers.

2. Strict approval processes: Some HOAs require potential buyers to be approved by a process that may be unduly onerous. These processes can deter, delay or deny sales that would otherwise occur without incident.

3. Maintenance issues: Neglecting common areas or delaying necessary repairs can lower property values or make a property unappealing to buyers.

4. Unreasonable restrictions: Overly strict HOA rules on property use or modifications can limit the pool of interested buyers.

5. Right of first refusal: Some HOAs reserve the right to purchase a property before it can be sold to an outside buyer, potentially delaying, complicating, or denying sales in the open market.

Members of HOAs could benefit from knowing whether their HOAs rules allow them to deploy any of the above tactics. Reviewing the HOAs documentation (bylaws and CC&Rs) with the assistance of a legal counsel that has extensive experience with Florida HOAs can help to identify whether these tactics can potentially be used.

“If an HOA’s actions directly and unjustifiably interfere with a homeowner’s ability to sell their property, this could be grounds for a tort claim.”

Legal Strategies for Homeowners

If a homeowner is facing challenges selling a property due to HOA actions, they can consider the following steps:

1. Review governing documents: Thorough examination of an HOA’s bylaws, CC&Rs, and any relevant Florida statutes can help homeowners understand their rights and the HOA’s obligations.

2. Communicate and negotiate: Before pursuing legal action, homeowners can attempt to resolve the issue through direct communication with the HOA board.

3. Seek mediation: Many HOAs have provisions for mediation in their governing documents. This can be a less costly alternative to litigation. However, homeowners beware: arbitration is binding and there is a often no means to make appeals.

4. Consult an attorney: A Florida attorney with extensive experience in real estate and HOA matters can help homeowners understand their options and the strength of their case.

5. Consider a derivative action: In some cases, homeowners can sue on behalf of the HOA itself if they believe the board is acting against the association’s interests.

6. File a complaint with state agencies: Florida agencies overseeing HOAs can investigate complaints and take action.

7. Gather support: Sometimes it pays to collaborate with other homeowners who may be facing similar issues to present a united front.

Preventive Measures

An ounce of prevention is worth a pound of cure. Homeowners who have plans to sell their properties can avoid complications by staying involved and attending HOA meetings. Homeowners my also consider serving on the HOA board itself to have a voice in decision-making and a better understanding of and influence over an HOA’s decision making process.

At the very least, remaining informed by keeping up with an HOA’s communications can help homeowners be aware of potential issues before they escalate. Homeowners can also push for clear communication about their HOA’s financial health and any developing legal issues with members, contractors, vendors, or government subdivisions.

The Importance of an Attorney

While HOAs can provide valuable services to communities, they can sometimes become obstacles to homeowners looking to sell their properties. Florida HOA members experiencing obstruction by an HOA should avoid “going it alone” and enlist the help of a Florida-licensed HOA attorney. If you are in this situation, an attorney can help you to understand your rights, communicate effectively, and be prepared to take legal action if necessary, thus protecting your interests as a property owner. Remember that each situation is unique, and consulting with a qualified attorney is often the best way to determine the most appropriate course of action in your specific circumstances.

South Florida Law

If you find yourself involved in a dispute with your housing association turn to the attorneys of South Florida Law for support. We have boutique firm attention to detail with the big firm resources necessary to take on a homeowner or condo association that is violating your rights. Call us today at 305.900.8885 or reach out via our contact form.