By: Helsing Admin
Most changes of ownership happen through escrow. These transfers require by law that a “demand” be provided by the association. The association is typically provided with a copy of the grant deed and at least the first month’s assessments from the title company upon close of escrow. The association then changes its records, blocks the former owner from access to association information, gives the new owner access, sends out welcome packages with rules and other important information, and as appropriate reassigns pool keys, reprograms entryways and elevators, or other tasks so that the new owner is recognized as the owner, is informed of association rules and policies, and has access to amenities.
However, what happens when there is a change of ownership and the change does not go through escrow? This can happen through a foreclosure, a quitclaim deed adding or subtracting an owner, or placing the home into a family trust. Often, these changes in ownership are NOT made known to the association – with significant inconvenience and cost to both the new owners and to the association.
The foreclosure issue has been partially resolved by a new law that now requires lenders who foreclose to provide a copy of the grant deed within 30 days. Dealing with lenders who do not comply with the law is a different issue and we will not dwell on it here.
However, when a homeowner adds or subtracts others (or even sells the home) and does not let the association know of the transfer, additions, or subtractions to title, difficulties are eventually going to arise. All the rights, privileges, and responsibilities of being a member of your homeowners association derive from being an owner. Ownership is proven by having a deed for the property with your name listed on title. Some of these changes are simple to correct. For example, a person calls management and asks to have a pool key issued, or to allow a guest to park – or some other matter of business. If that person is not listed as an owner, the association is not going to be able to accommodate the request. This type of issue is usually quickly resolved by asking that person for a copy of the deed showing them on title – and the records are changed.
More problematic, however, are situations where people call and ask for routine business matters and they are no longer an owner, but the association has no idea that a change in ownership has occurred. For example, what if you had a divorce and did not let the association know your ex-spouse is no longer an owner? That ex-spouse can still speak for you, has access to your records and accounts, and if not friendly can cause you some problems. If you have removed anyone from title it is extremely important that you let the association know.
Likewise, if you have been removed from title it is important that you let the association know. If those on title (even if they are related to you) do not pay their assessments, cause damage to the common area, cause damage to other homes (overflowing toilet in a condominium for example) and the association is pursuing actions to recover its damages, you are going to be included, at least initially, in that legal action. While the fact that you are no longer an owner will eventually be discovered, it may well cost you time and money extracting yourself from the action.
Recently it has become possible to discover changes in ownership that are not reported to the association, and many associations are taking the time and money to discover these changes – because in the long run, finding out at a later date can be much more costly. For example, most legal actions and many foreclosure actions need to have parts or all of the action redone when it is discovered that ownership has changed. To the extent the association is successful in its pursuits these increased costs may be passed on to the actual owners, but often this is not possible and the association ends up eating those costs with a resulting increase in assessments to everyone in the community. In order to avoid those increased expenses – it is more cost-effective to track ownership proactively and recover those costs up front from the owners, rather than wait and discover the matter after the fact.
The bottom line – for all involved it is easier and cheaper to report changes in ownership as they happen. Please note, there is no legal requirement that I am aware of that forces any homeowner to let the association know if they have made an ownership change. However, the association does have the right and duty to recover its costs of changing records when a transfer occurs. In our opinion, everyone comes out ahead when owners inform the association of changes, and associations enact methods of discovering changes that have not been reported in a timely manner.
The Helsing Group, Inc.
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