How do I find out HOA code violations on a house I'm buying?

[hguy00]

Thanks for the additional responses, everyone. The advice in this thread helped my decision process regarding how to move forward. By way of an update:

By showing the seller (in this case, a bank) the HOA covenants and photos of the retaining wall, they significantly lowered the contract price of the home. It wasn't the decrease I asked for, but it was enough to make the purchase worth while. We moved forward with said purchase and will begin renovations soon.

A couple of replies to the above:
IC_deLight said:

it would be a bad idea to request an inspection in conjunction with a resale certificate...The law requires the HOA to identify any claim or condition that existed as of the date of the resale certificate and to list it on the certificate.

Precisely. But how is the latter not an "inspection"? In order to generate the resale certificate and enclose all the issues the HOA has with the home at the time of sale, they send a code enforcement agent to the property to "inspect" it. That is where the list of issues comes from.

The retaining wall made the list; however, the HOA's own interpretation of their bylaws was made clear on the document: if I have to tear down the wall and rebuild it, new walls must be masonry. If I don't have to tear it down, the existing wall can stay. So the question became, do I have to tear it down to replace a couple of rotten timbers. And the answer is no, thankfully.

msumner said:

I'm surprised that the bank hasn't received any notices from the HOA to repair the wall if it's in that bad shape. May be the HOA should repair it because of lack of response and send the bill to the bank.

Apparently it wasn't in that bad of shape. It just looks overwhelming to a layman like me, and I probably overreacted. That said, the photos made the bank see this same point, which is why they discounted the price more.

Brookside said:

If you want advice: I would say, run -- don't walk! -- away...And might I add that the time of picking up a a "good deal" on a house via foreclosure is pretty much over. These days, an owner in financial distress can either sell quickly or rent a property out. They walk away from a mortgage only if the home is a black pit of expensive structural/repair issues.

I follow your logic. The problem is that you assume all the money decisions people make are logical. The entire study of economics exists precisely because people are not, particularly with big financial decisions. Emotion usually overrules logic.

My first home was a flip. I got it for 1/2 the price other homes were selling for in the neighborhood. The reason? It was an estate sale, and though the deceased woman's children would have liked to have gotten more for the property, they weren't interested in slapping a coat of paint on and cleaning it. The house didn't show well, and most people are not good at seeing the future potential of something when it is really ugly, so it didn't sell.

In the case of the foreclosure I just bought, it was a couple divorcing. The wife got the house but couldn't afford it. Indeed there probably were other options she could have pursued, not the least of which was renting it out, but she chose not to. Why? One potential issue is that such a solution doesn't allow distressed homeowners a clean break. Though you might be covering the unaffordable payment with rental income, the payment still counts against your debt to income ratio. And what about the risk of a non-paying tenant? And what about paying for the house in between tenants? And what about maintenance issues? Let's not forget the biggest factor (an emotional one)--most people don't want to deal with "toilets and tenants". Not even if it is a new house with no deferred maintenance needing to be done. The perceived risk is too great.

If that weren't true, owning rent houses would be much more commonplace than a 401K invested in mutual funds, because the logical advantages (and levels of risk) associated with real estate are a no-brainer, especially compared to the stock market. But alas, it is true. People are not logical with money. And there ARE always good deals to be found. Albeit, sometimes it takes patience and a bit of luck.