3 May In the Maryland Homeowners Association Act (HOA) (Title 11B, Section 106 (f)), it states that “the provisions of subsections (a), (b), (d), and (e) of this section do not apply to the sale of a lot in an action to foreclose a mortgage or deed of trust.” May 3, 2017By Cindy Sellers Distressed Properties 0 The REO seller of bank-owned property is not exempt from complying with the HOA. As you correctly noted, the HOA does provide an exemption for properties in an action to foreclose a mortgage or deed of trust but not for lender owned properties. See §11B-106 of the Maryland Real Property Article for more information. Contrast the above with Section 10-702 of the Real Property Article of the Maryland Article which specifies the seller’s responsibility to provide a buyer with a Disclosure/Disclaimer Statement. This provision specifically exempts sales by a lender or an affiliate or subsidiary of a lender that acquired the real property by foreclosure or deed in lieu of foreclosure from providing the buyer with a Disclosure/Disclaimer Statement. This language is broader, and exempts both the foreclosure sale on the courthouse steps (or Deed in Lieu) and the subsequent REO sale by the foreclosing lender or its affiliate/subsidiary. However, there are no exemptions from laws like the Homeowners Association Act, the Condominium Act or lead paint disclosure as well as disclosures required by local law for REO properties. Nevertheless, some federally chartered institutions are declaring that they are exempt from all such disclosures. As of the date of this response, there is no controlling legal authority for that assertion. It is also important to remember that under both the Homeowners Association Act and the Condominium Act, a buyer may rescind a contract if the buyer does not receive the required disclosures and documents within the specified time. Under the law, the buyer waives the right to rescind if the buyer proceeds to settlement not having received the documents. Under the circumstances you describe, the time to enforce the statute is before settlement. The buyer has no remedy after settlement and should be advised to seek competent legal advice before proceeding. We apply a similar analysis to other disclosures, like state and federal lead paint, private water and sewer facilities charges, and various locally required disclosures. Unless the seller can demonstrate, through production of controlling legal authority, that the seller is exempt from these requirements, the seller should comply. Related Posts Is there a limit on how much a condominium association or homeowner’s association may charge for the resale package? Is there a limit on how much a condominium association or homeowner’s association may charge for the resale package? In a transaction involving the resale of a condominium, which MAR forms are used and under what circumstances? In a transaction involving the resale of a condominium, which MAR forms are used and under what circumstances? I have a buyer-client who wants to purchase a property that is “for sale by the owner” (FSBO). I have a buyer-client who wants to purchase a property that is “for sale by the owner” (FSBO). What do I have to do to comply with PHiFA? I am in discussions with a prospective client on a listing for a property that will be a “short sale.” I am in discussions with a prospective client on a listing for a property that will be a “short sale.” Do I have to disclose this fact to prospective buyers? Are there any other issues of which I should be aware? I am a listing agent involved in a short sale transaction. The lender has requested that I reduce my commission. The selling broker will not agree to accept less than what was advertised in MRIS. I included a comment in the remarks section that the commission was subject to lender approval. What happens if the selling broker refuses to take a commission that is less than what the listing broker offered in MRIS? Also, is it true that Fannie Mae servicers cannot condition the approval and closing of short sales on the willingness of the listing firm to alter its fee arrangement with the borrower as long as the total commission does not exceed 6%? Does this mean the mortgage company has to pay the fee if it’s less then 6%? . I represent a seller in a short sale transaction. I represent a seller in a short sale transaction. Where can I find guidance about the lender’s procedure for handling offers that come in after the property goes under contract? Comments are closed.