Does title insurance cover unpaid HOA type fees?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
atikovi
Posts: 34
Joined: Tue Sep 10, 2019 7:20 pm

Does title insurance cover unpaid HOA type fees?

Post by atikovi » Tue Oct 08, 2019 2:28 pm

Looking at a commercial vacant lot for sale. About to make an offer when the listing agent messages me, oh by the way, "In 2008 my client received the attached invoice for some access road improvement. His reply is attached. The matter has NOT come up again since 2008."

It looks like the owner of the lot next to this one had a common access road built by the association with involved moving buried utility lines and what not to the tune of some $70,000. This lot would use a small part of that road, maybe 50 feet. The association billed the owner of this lot half that in 2008 but it was never paid. The other lot has a multimillion dollar commercial building on it and gets 95% of the benefit of the improvements. Apparently the association hasn't gone after the owner of this vacant lot, yet. Would title insurance cover this if six months later the association asks me to pay $35,000 for the improvements from 10 years ago?

User avatar
willthrill81
Posts: 13225
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Does title insurance cover unpaid HOA type fees?

Post by willthrill81 » Tue Oct 08, 2019 2:30 pm

Is there a lien against the property for these fees?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

J295
Posts: 2101
Joined: Sun Jan 01, 2012 11:40 pm

Re: Does title insurance cover unpaid HOA type fees?

Post by J295 » Tue Oct 08, 2019 2:47 pm

OP. You are now on notice about that possible cost, and any associated lien. Typically, title insurance excludes items within the insured’s knowledge, whether listed as exceptions on the policy or not

Respectfully, your asking a largely irrelevant question.

If you make an offer on this property, get assurances that this item has been paid. Presumably, you will be receiving a warranty deed without exceptions.

Topic Author
atikovi
Posts: 34
Joined: Tue Sep 10, 2019 7:20 pm

Re: Does title insurance cover unpaid HOA type fees?

Post by atikovi » Tue Oct 08, 2019 3:28 pm

If there is a lien on the property, it would show up in the title report so I'm not worried about that. Can this association come after me for something the previous owner was supposed to pay 10 years ago? Isn't there a statute of limitations involved as well?

fabdog
Posts: 687
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: Does title insurance cover unpaid HOA type fees?

Post by fabdog » Tue Oct 08, 2019 3:38 pm

This is a wonderful forum, and folks have knowledge about a lot of things.

This sounds like an issue that a local lawyer knowledgeable in the rules in this state/locality would be best placed to answer for you, rather than our suppositions of what we might think without detailed knowledge of what rules would apply.

Mike

anon_investor
Posts: 359
Joined: Mon Jun 03, 2019 1:43 pm

Re: Does title insurance cover unpaid HOA type fees?

Post by anon_investor » Tue Oct 08, 2019 3:42 pm

fabdog wrote:
Tue Oct 08, 2019 3:38 pm
This is a wonderful forum, and folks have knowledge about a lot of things.

This sounds like an issue that a local lawyer knowledgeable in the rules in this state/locality would be best placed to answer for you, rather than our suppositions of what we might think without detailed knowledge of what rules would apply.

Mike
+1, get a local lawyer as local law differ greatly on how this would apply to your situation.

User avatar
willthrill81
Posts: 13225
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Does title insurance cover unpaid HOA type fees?

Post by willthrill81 » Tue Oct 08, 2019 3:58 pm

anon_investor wrote:
Tue Oct 08, 2019 3:42 pm
fabdog wrote:
Tue Oct 08, 2019 3:38 pm
This is a wonderful forum, and folks have knowledge about a lot of things.

This sounds like an issue that a local lawyer knowledgeable in the rules in this state/locality would be best placed to answer for you, rather than our suppositions of what we might think without detailed knowledge of what rules would apply.

Mike
+1, get a local lawyer as local law differ greatly on how this would apply to your situation.
:thumbsup
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
Kenkat
Posts: 5223
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Does title insurance cover unpaid HOA type fees?

Post by Kenkat » Tue Oct 08, 2019 5:52 pm

What did the reply say?

You really need to also get a copy of the HOA charter / incorporation documents to see what they can or cannot do, what the rules are for unpaid items, etc. Often an HOA cannot assess and bill for special, one time improvements, especially those benefiting just one property owner, without consent of the association members or those affected by the assessment.

Topic Author
atikovi
Posts: 34
Joined: Tue Sep 10, 2019 7:20 pm

Re: Does title insurance cover unpaid HOA type fees?

Post by atikovi » Tue Oct 08, 2019 5:59 pm

There is something about a common access easement between two lots that the owners are supposed to share the costs equally.

User avatar
Kenkat
Posts: 5223
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Does title insurance cover unpaid HOA type fees?

Post by Kenkat » Tue Oct 08, 2019 7:19 pm

atikovi wrote:
Tue Oct 08, 2019 5:59 pm
There is something about a common access easement between two lots that the owners are supposed to share the costs equally.
Given this information, I would be very careful.

User avatar
willthrill81
Posts: 13225
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Does title insurance cover unpaid HOA type fees?

Post by willthrill81 » Tue Oct 08, 2019 7:55 pm

Kenkat wrote:
Tue Oct 08, 2019 7:19 pm
atikovi wrote:
Tue Oct 08, 2019 5:59 pm
There is something about a common access easement between two lots that the owners are supposed to share the costs equally.
Given this information, I would be very careful.
This could come back to bite the OP. Again, I would highly recommend speaking with a local real estate attorney about this, who will likely be able to answer the question in a few minutes. It would be well worth the OP's incidental investment.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Mr. Rumples
Posts: 159
Joined: Sun Aug 25, 2019 7:16 am

Re: Does title insurance cover unpaid HOA type fees?

Post by Mr. Rumples » Tue Oct 08, 2019 8:44 pm

Commercial property associations may or may not be different than an HOA depending on the state. Every state is different. Also, this may fall under HOA law or debt statutes depending on the state. In some states, some debts don't go away.

If this was in Virginia, the debt would be void if it was in an HOA. Virginia law (§ 55.1-1833) requires that an HOA lien be recorded within 12 months from when the debt was due. Colorado has a similar 12 month rule for the HOA to record the lien.

The association dropped the ball by not recording a lien and not foreclosing on the unpaid lien. Recording liens and when needed, foreclosing on unpaid liens, is a strong enforcement tool. I wonder how many other folks owe money that is not collected. That should be somewhere in their financials.

While the listing agent can't give legal advice, he/she should have the means to find this out pretty easily since he/she is the one getting the commission. Also, if they are buried utility lines are they on a public right of way and if so does that have any bearing if there is something owed to the local jurisdiction? In Virginia, unpaid debts to the government don't go away without jumping through hoops; if some official starts cleaning up the books, what then? That doesn't seem like the case here, but it is worth finding out.

BillyK
Posts: 20
Joined: Sat Sep 24, 2016 1:30 am

Re: Does title insurance cover unpaid HOA type fees?

Post by BillyK » Tue Oct 08, 2019 9:18 pm

This is a conversation that should be had with the title company. Their attorneys will know exactly the specific laws pertaining to this item. Then they will specifically tell you if anything needs to be done to cure it. Ultimately, the title company and their underwriter are the ones that will need to be satisfied in order to delete this item and any other exceptions on the title policy.

iljets10
Posts: 2
Joined: Sat Oct 05, 2019 9:56 pm

Re: Does title insurance cover unpaid HOA type fees?

Post by iljets10 » Tue Oct 08, 2019 10:13 pm

Why don't you reduce your offer by at least $35k from what you think the property is worth? That only seems fair to me. If the seller is confident this is a non-issue, then they should get a signed letter from the association stating the assessment was paid in full.

User avatar
willthrill81
Posts: 13225
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Does title insurance cover unpaid HOA type fees?

Post by willthrill81 » Wed Oct 09, 2019 12:00 am

iljets10 wrote:
Tue Oct 08, 2019 10:13 pm
Why don't you reduce your offer by at least $35k from what you think the property is worth?
Because it might be a non-issue, and offering less might result in the loss of the purchase opportunity. The title company and/or a real estate attorney should be able to tell the OP whether this is a real problem.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Post Reply