Important Questions for Your Minnesota Town Home HOA.

Minnesota is known for being a pro-consumer state. In most cases, town home or condo buyers enjoy a statutory 10 day right of rescission, during which time the buyer can examine a Resale Disclosure Certificate. This ten day time period starts from the day you receive the documents. You should use this time to review pertinent association documents, rules and regulations, bylaws, and financial disclosures. If you have questions, you should contact the association directly by phone. If you are uncertain about any clauses or provisions in the documents, bring them to a real estate attorney for perusal.*

According to MN Statute 515B (MCIOA) Minnesota Common Interest Ownership Act, most associations are subject to MCIOA requirements.

Exemptions are spelled out in 515B, but in general terms, they include:

• Planned communities of two units occupying a common interest community plat, and not subject to a master association. Specific exemption requirements are outlined in 515B.
• Planned communities with separate parcels for detached units.
• Cooperatives meeting specific requirements.

Some associations that qualify for these exemptions may have elected to be covered by MCIOA. Therefore, the first and foremost question is to determine if the association is covered by this law. If it is not, you may want to review the documents before you sign a purchase agreement, or you may want to amend your offer to provide a 10-day right of recission in any case.

Here are a few questions that you should ask about any prospective homeowner assocation:
Is the association managed by the homeowners, or is there a contract with an outside, professional management association.

• How much is the association fee? Is this collected monthly or annually?
• How much can the fee be increased per year? How is this determined?
• What is included? Many associations offer snow removal, lawn care, exterior maintenance, hazard insurance, and water/sewer. Some associations do not offer all of these amenities. Some condo fees include heat and recreation facilities. Some associations even offer basic tv cable services.
• Determine which exterior common elements are covered by the association. Sometimes, things like garage doors or decks are the homeowner’s responsibility. Are the units located on private roads? The association will be responsible for the maintenance of them. If the roads are in disrepair, this could mean upcoming assessments.
• Are there any upcoming assessments? How are they determined?
• What are the reserves? You want to know that the association has money available to cover any major repairs.
• What is the maintenance schedule? For example, how frequently are the units painted?
  Is the association involved with any lawsuits?
• Are there restrictions on street parking?
• What are the pet restrictions? Sometimes associations will exclude pets, or pets above a certain number and/or weight limit. Sometimes specific dog breeds are restricted. Sometimes buyers are not concerned about restrictions because they see current home owners breaking the rules. Be forewarned; associations have legal remedies to exercise if you break rules and regulations. I have seen instances where owners of prohibited dogs have received hefty monthly fines until the dogs were removed.
• Are there any restrictions or additional fees for using things like party rooms, guest rooms, or other recreational facilities?
• Is there hazard insurance? Many associations include hazard insurance with the fee to cover exterior structure and elements. Some do not. Some provide hazard insurance, but it is billed separately on a quarterly or annual basis.
• Are rentals allowed? Some associations have no limitations on the number of rentals allowed. Some do not allow any. Some will allow up to 25% rented out, with specific, additional conditions. This could be important if you need to move out, but will be retaining the property. It may also preclude investors from buying the townhome when you decide to sell it.

In some limited cases, buyers and sellers can waive the Resale Disclosure Certificate requirement. If you have any more questions about purchasing Minnesota town homes or condos, please don’t hesitate to ask your Minnesota REALTOR. Call me at 651-230-4889 to learn more about purchasing a town home in Minnesota.

*Please note: This post is for informational purposes only, and should not be considered legal advice. If you have any legal questions about a town home purchase and HOAs, contact a Minnesota real estate attorney.

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