Obtaining Owners’ Association Information on Bank-Owned Properties
QUESTION: I have a buyer client who wants to make an offer on a bank-owned foreclosure property. It’s a nice house located in a development that is regulated by an owners’ association. I know that the newly-updated Residential Property Disclosure Statement has several new questions about owners’ associations, but a bank doesn’t have to complete a Residential Property and Owners’ Association Disclosure Statement when it sells property on which it has foreclosed. Since the new version of the Offer to Purchase and Contract (form 2-T) (“Contract”) no longer requires the completion and attachment of the Owners’ Association Disclosure Addendum (form 2A12-T) (“Addendum”), how is my buyer supposed to get any information about the owners’ association?
ANSWER: Just because the Addendum isn’t mentioned any more in the current version of the Contract doesn’t mean that it can’t be used as an addendum to the Contract. There’s no reason why the Addendum couldn’t be completed by the seller, listed as an addendum in paragraph 14 of the Contract, and attached to the Contract. The real question is whether the bank seller will be willing to complete the Addendum. Some will not, but others will. You should determine whether the bank in question is willing to complete the Addendum. If it is, great. If not, your buyer must decide whether she or he is willing to obtain information about the owners’ association herself or himself, either before making an offer or, if a contract is entered into first, during the Due Diligence Period.
In any event, the buyer should understand that even if the bank seller does complete the Addendum, any information supplied is to the best of the seller’s knowledge, and the buyer should have all information confirmed independently. This is made clear in the unnumbered paragraph immediately preceding paragraph 1 in the Addendum. In this regard, note that in paragraph 7(c) of the Contract, the Seller specifically authorizes and directs the association or its management company (if any) to provide the buyer copies of certain association documents, as well as contact information for president of the association or the association’s manager.
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