Tip 17-2016: VAR Contract and HOA Restrictions
Tucker’s Tip 16-2016 discussed that in some situations where there is “no HOA,” there still may be a set of restrictions and covenants that limit the Purchaser’s use of the property. If a recorded set of CCRs or other type of restrictions governs property not in an HOA, to protect the Purchaser, insert the following into the blank “Other Terms” Paragraph 31 of the VAR contract:
“In the event the Property is not in an HOA, the Purchaser’s obligations under this Contract are contingent on Purchaser reviewing and approving any recorded covenants, conditions, and restrictions (CCRs) including road maintenance agreements. Said review and approval shall occur within ____ days of receipt of any applicable CCR and/or road maintenance agreement.”
This way, the Purchaser will have the opportunity to determine if any recorded restriction which is not subject to the Virginia Property Owners’ Association Act, (and therefore is not provided in an HOA disclosure packet), would inhibit the Purchaser’s intended use of the property. Since the VAR contract states that the Seller is conveying the title to the property to the Purchaser subject to any recorded restrictions (“Title” paragraph in the VAR), including the above language protects the Purchaser, if the CCR contains provisions that the Purchaser does not like.
Tucker’s Tips had heard of a situation where the Purchaser intended to have donkeys on the property. There was no active homeowners association and all the neighboring properties had other farm animals, so donkeys did not seem out of the ordinary. However, at the time of closing, the parties discovered that there were CCRs which dictated donkeys could not be kept by property owners. Since the contract stated the Purchaser was accepting the property subject to all CCRs, there was nothing the Purchaser could do but continue to close on the property and never have donkeys as a pet.
Practice Tip: Review title work at the time of listing, especially for properties without active HOAs or in old developed neighborhoods. Keep an ear open to a prospective Purchaser’s intent to use the property, especially if it sounds out of the ordinary.
Please call me if you have any questions.
William (Bill) D. Tucker, III
434-973-7474 (Charlottesville Office) 434-589-3636 (Lake Monticello Office) 540-217-5470 (Harrisonburg Office)
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