Full disclosure records vital for homeowner, prospective buyers Full disclosure records vital for homeowner, prospective buyers (January 27, 2006)

Power of HOAs can make or break a sale
by Jeb Bing

While a homeowner who sees a ghost in the attic doesn't have to tell a prospective buyer about the sighting, that's about the only report about the house that he's spared in these days of full disclosure.

Although no ghosts are on the reporting list, deaths are. If anyone has died in the house within the last three years, that has to be disclosed. That's along with five pages of other questions of state-mandated disclosure documents. These range from radon levels to standing water around sprinkler heads to asbestos insulation.

Perhaps the most significant disclosures, however, concern the Covenants, Conditions & Restrictions on the property, commonly called the CC&Rs. These, plus a full disclosure of Homeowners Association (HOA) membership requirements for the property, can make or break a sale if the restrictions and requirements are not in accord with a buyer's approval.

Most neighborhoods developed over the last 30 to 40 years have CC&Rs, which can govern whether the home can have a rooftop antenna or on site containers or recreational vehicles. HOA rules go much farther, with a binding agreement signed at the time of sale that can regulate such things as the colors for homes in the neighborhoods to patio awnings.

"This is why it is so important to have a Realtor handle your sale or purchase," said Gina Piper of Prudential California Realty. "It's a Realtor's job to make sure that you are fully informed."

"I always go over CC&Rs and HOA rules with my clients before they bid on a house, and make sure they read every word," Piper said. "I do the same thing with sellers, sitting with them to make sure they are fully disclosing everything they know about the property they're selling. These agreements might say you can't park a boat or an RV outside your house. If you've got one, this might not be the house for you."

According to Pleasanton City Attorney Michael Roush, the intent of the CC&Rs is to ensure that neighborhoods are well maintained. In the long run, it's the city that enforces the CC&Rs, and usually not too closely until there's a complaint. Paint colors and landscaping are usually not enforced under these regulations, although Pleasanton has a design guideline against painting houses white or loud pastels on hillside lots west of Foothill Road.

It's the HOA rules that are much more stringent, and they are enforced.

Heinrich Fischer learned this earlier this month when the City Council turned down his request to keep a retractable green canvas awning that he had attached to the back of his house 14 months ago. A neighbor complained to the Homeowners Association for his Mohr-Martin neighborhood on Poppybank Court, which told Fischer to take the awning down. It said its rule prohibited canvas patio covers, and rejected Fischer's rebuttal that his was a retractable vinyl awning, not a canvas cover.

He next sought relief from the Planning Commission, which also rejected his request, and then lost on appeal to the council. Council members said they probably wouldn't have any objection to his retractable awning, but refused to go against an HOA decision.

"If there's an HOA and typically a design or architectural review committee established to consider any changes, such as the one Fischer made, then the council is likely to defer to those established organizations," Roush said. "HOAs are particularly concerned about paint colors or other changes in condominiums or in neighborhoods where the homes are close together and changes affect everyone."

"There's a lot of discretion in these HOAs as to what homeowners can do," Roush added. "There are also established procedures that any member can go through to seek a change or to modify a regulation."

HOAs are generally not formally recognized by municipal governments, but they are highly regarded and respected. For one thing, HOAs spare cities the job of mediating neighborhood issues, whether it's the color of paint or landscaping.

Dues to HOAs also go toward maintaining and improving common areas, such as a neighborhood swimming pool, gateway signs and landscaping and, in some cases, even the private streets that have not been turned over to the city. In Kottinger Ranch, the homeowners association spent more than $400,000 to fight a PG&E plan to bury high-voltage electric cable under narrow streets. Eventually, Kottinger Hills, in conjunction with the city of Pleasanton, won its case before the state Public utilities Commission, and Kottinger Hills got some of its money back, but not before members had paid out large amounts in advance to keep the fight going.

Piper said full disclosures offer a benefit to both sellers and buyers by carefully spelling out every detail that can affect the home. As for the death disclosure requirement, she said some buyers might have superstitions or ethnic groups might have religious or other beliefs about being in a room where someone died. That's why the location of any nearby cemeteries also must be disclosed.

Officials said the HOAs and CC&Rs help give a neighborhood a consistently good appearance. Knowing their rules, they also make us more aware of the need to keep good records.

"We would want to know in advance of any problems or defects about a house we are buying, and about its history of maintenance, and the CC&Rs and especially the HOAs help us do that," she said. "We want to be fully informed on what is likely to be one of our largest purchases, and Realtors can help make sure that you are."

If owners can't find a copy of their home's CC&R, they can request a copy from any local title company or through Piper at 462-9175.

Most homeowners associations have regular communications to their members, as well as keep regulations on file that govern the neighborhood they serve.

E-mail a friend a link to this story.