Importance of Reviewing HOA Covenants Ahead of Time

Question:

Are there any potential issues affecting home use that a real estate agent should be aware of prior to writing an offer?

Answer/Recommendation:

There are several issues that may affect a homeowner’s use of his/her property, but one concern that often gets overlooked is the Neighborhood Covenants and Restrictions.

Generally, Neighborhood Covenants and Restrictions govern what homeowners may and/or may not do with their property.  For example, some Covenants and Restrictions preclude work sheds in the back yard, or require that cars must always be parked in garage and not in the driveway and/or on the street, or govern what color a home might be painted.

If homeowners attempt to run contrary to the Neighborhood Covenants and Restrictions, the Homeowner’s Association (HOA) might institute legal action adverse to the buyer/homeowner for the violation.  And this could turn into a very contentious situation.

But whose responsibility is it to determine if a particular neighborhood is suitable for the plans of a particular homeowner?  Is it the buyer’s or the agent’s responsibility?

Lines 154-191 of the Louisiana Residential Agreement to Buy or Sell, covers the Buyer’s Inspection and Due Diligence period.  Of particular note is lines 166-169, wherein the following is stated:

“Other due diligence by BUYER may include, but is not limited to investigation into the property’s school district, flood zone classifications, current zoning and/or subdivision restrictive covenants and any items addressed in the SELLER’S Property Disclosure Document.”

Thus, ultimately it is the Buyer’s responsibility.  However, real estate agents should take it as their duty to help guide and direct their clients.

Accordingly, it is highly recommended that all selling agents get to know the wants and needs of their clients ahead of time and compare those wants and needs with the Neighborhood Covenants and Restrictions prior to writing any potential offer on a piece of property.

For any questions regarding this email, please contact me at rye@tutentitle.com.

H.L. “Rye” Tuten, III, is a Title Attorney/Real Estate Closing Attorney and Owner of Tuten Title & Escrow, LLC.  Formerly assigned by RICE Insurance to defend real estate agents throughout Acadiana, much of his more than nine years’ litigation experience is with real estate concerns.