What is an HOA’s primary purpose?
A Home Owners Association is an organizational mechanism whereby developers and joint owners of residential property — like in a housing development or condominiums — can sustain an orderly development. The HOA operates according to a written plan that is used to enforce the provisions, or covenants, within the plan. A covenant is different from a contract, because a contract is for one particular subject over a period of time. Covenants are infinite. They continue into the future, like Abraham’s covenant with the Lord continues to his descendants. The covenant goes on forever. That is the nature of an HOA.
When someone purchases a home in an area with an HOA, are they required to join?
They are. If they purchase the property, they have joined whether they want to or not. Before they purchase any property, they need to know what is in there. It should be disclosed to them by the real estate agent, because it is a restriction on the usage of the property. The purchaser will not have an unfettered use of the property.
HOAs have some advantages. You can have community property as part of the covenant where you have a swimming pool or a clubhouse. Condominiums have HOAs with restrictive covenants. They have tennis courts and all kinds of facilities, like exercise rooms. HOAs also have disadvantages. It is very important that a prospective purchaser of any development property in an addition or in a multifamily scenario or townhouse be fully apprised of what the restrictive covenants are on the property that they want to buy, because they are going to be stuck with that.
What type of resolutions have you helped people with in conflicts in this situation?
In one of the largest resolutions our firm handled, we represented the developer. He had purchased an existing development and put a golf course there. A lot of the people that had already bought property were not golfers. They did not particularly like golf balls bouncing off their windows. Finally, after three years in litigation, going up to the Oklahoma Supreme Court and the appellate level a couple of times, we were able to resolve it. It was a major challenge. There were many people’s and many families’ interests at stake. We were able to effect a resolution. Our client was able to continue the use of his golf course. The other parties, the families whose houses were affected, they also compromised. Certainly, we would have never counseled him to put a golf course in the beginning, but it was something he had done already at the time he retained me. He had invested substantial sums of money. And we found him a way through the problem.
Also, we have represented a family who bought a house and the realtor did not tell them that there were restrictive covenants on the property. When the new owner started trying to make improvements to his property, he was given a cease and desist letter by the developer. We are still litigating those issues, determining what the damages are to this family, which can be considerable.
So in this area of the law also, we have worked on both ends. We have worked on the development or the business end of these HOA disputes, as well as the consumer end of these HOA disputes.
When someone is leasing a home from someone who is in this HOA area, would that be disclosed to them as well?
Yes, it needs to be disclosed because it is a limitation on the use. Very often, there will be restrictions on leasing to third parties. In condo associations, which are a form of HOA restricted covenant communities, they may not allow an owner to lease until he or she has owned the property for a period of years, because they don’t want people to just come in, buy the place, and use it for speculative purposes.
This type of HOA restriction is there because the people who live in this community want folks to actually be committed to living there equally as residents and not just using it for a commercial purpose. They don’t want to have a different person as their neighbor every week. They want someone who will take care of the property and follow the rules. Anybody who purchases a property that is restricted by an HOA needs to be aware of any restrictions on subleasing or leasing it out to third parties, because they may not be able to do it.
How we assist is by analyzing the documents, going over the HOA, and rendering an opinion to the client. The HOA provisions are not negotiable. It is a take-it-or-leave-it deal, because the restrictive covenant goes with the title itself. Until the covenant community, the HOA itself, amends the restriction, you have to live by them. We are familiar with the operation and governance of an HOA, and how to draft and to make amendments to the restrictions.
How does your firm help overall with these types of disputes?
We use a teaming approach to involve our client whether it be the developer, the community itself, or an individual in the community. We set out to define the rights and duties of the parties, and we determine at the outset as much as possible about what is the likelihood of prevailing on the client’s issues. We do not want to give a client a false impression about the likelihood of success. We do a risk analysis and we assist the client in understanding whether or not they can reach their litigation or negotiation goal. Then, we engage in what is the best course based upon a client’s choices — the choices the client makes between available options. We do everything we can to get that result, whether it be in the state district courts, the appellate courts, or the Oklahoma Supreme Court. We have the experience and knowledge to litigate issues at any level.
We achieve good results by acquiring the client’s perspective and goals. We want to make sure they are meaningful goals and that they can be attained, because some mountains can’t be climbed. We want to be able to tell the client it is too dangerous or it is going to take too much effort and you are not going to be able to get to the top. That is one of the things we do. We help with the risk analysis. Then, if it can be done, we load up, put our gear on, gear up and file the action, execute the plan, and get to the top the best we can as a team.