Does the Subdivision Require Your Buyer to Be Approved By the Homeowner’s Association?

Typically, subdivisions created in the last twenty (20) years now require buyers to be approved by the homeowner’s association prior to purchasing a property in the subdivision. This application requirement can be found in the subdivision’s recorded Declaration of Restrictions or Bylaws. The application requirement sets forth the application process and timing requirements.  Buyers purchasing property in such subdivision need to make sure they comply with the application process, including timely submitting their application for approval. This is especially important since it seems to now be a common practice for some homeowner’s associations and/or respective management companies not to release the homeowner’s association estoppel certificate to the closing agent until the buyer has submitted an application for approval to the homeowner’s association.

This is true despite the fact that the aforesaid homeowner’s association’s approval requirement and the issuance of estoppel certificate are typically two (2) legally independent processes. The estoppel process can be found in Florida Statute 720.30851 which provides that the homeowner’s association, or designee, has 15 days from receipt of the estoppel request to issue the estoppel certificate. You will note that there is no exception to the aforesaid 15 day rule. Regardless, buyers should be encouraged to submit their application for approval to the homeowner’s association earlier rather than later.

In addition to the buyer timely making application for approval, it is important to make the contract contingent upon the buyer being approved by the homeowner’s association when required by the subdivision restrictions. Unfortunately, the FR/BAR Homeowner’s Association Rider B only contains the disclosure summary required by Florida Statute 720.401 and does not address what happens if the buyer is not approved by the homeowner’s association.  In contrast, the Florida Realtor’s CRSP-13 Homeowner’s Association Rider J, Section 1 contains the following provision:

“If the Association documents give the Association the right to approve Buyer as a

purchaser, this Contract is contingent on such approval by the Association.  Buyer will

apply for approval within  ______ days (5 days if left blank) after Effective Date and use

diligent effort to obtain approval, including making  personal appearances and paying

related fees if required.  Seller and Buyer will sign and deliver any documents required

by the Association to complete the transfer.  If Buyer is not approved, this Contract will

terminate; and Buyer’s deposit(s) will be refunded unless this Contract provides otherwise.”

Currently, the FR/BAR Attorney Realtor Joint Committee is in the process of reviewing and revising Rider B to include a similar provision in addition to other changes.  However, until the FR/BAR Rider B has been revised, you should make your contract contains a similar provision to the aforesaid provision when you have a buyer purchasing in a subdivision that requires such approval process.

As always, if you have any questions concerning the foregoing, we urge you to consult with your real estate attorney.

Sincerely,

Berlin Patten Ebling, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com 

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