Issues which may arise as a result of Declarant-controlled HOA Boards are:
This is certainly not to imply that all Declarants engage in questionable or nefarious practices. There are many who do an excellent job from the outset all the way through transition. Although some demonstrate through their actions that they clearly have the best interests of the community at heart, and readily participate in fair practices, exhibit cooperation and transparency and gain the trust of purchasers and homeowners, there are no standards or consistency requiring the same from others in the industry. Alabama lawmakers have been complicit in allowing a weak nonprofit code to stand and the Real Estate Commission, Local Boards and Multiple Listing Services (MLS) have failed to require and provide appropriate member training.
To be fair, purchasers and homeowners are partially at fault. Most are far too trusting, do not read their CCRs; they do not ask questions or investigate “the state of the HOA” prior to making a purchase. Purchasers are more often focused on "The Pretty Package": curb appeal, location, schools, and nearby amenities. They are also often uneducated and gullible with regard to Alabama laws. In real estate, any oral agreements are generally unenforceable and should not be part of the decision-making process. One new homeowner in a large HOA community noted: "I thought Alabama consumer protection laws protected me when I bought this house". I have purchased homes in other states and the buying and selling process is strictly controlled". They rely on their licensed, professional Agent.
The ultimate risk to homeowners is when a community becomes disrupted as a result of rumors of mismanagement or abusive practices. The outcome is often anger, damaged reputations, impeded sales and even litigation. A community can sometimes become stigmatized or toxic, further reducing property values.
Unhappy homeowners may begin to associate risk not only with the Declarant, or inept and untrained homeowner Board, but also with their REALTOR® with whom they had a fiduciary relationship through a Buyer Agency agreement. The mission and vision of the Alabama Real Estate Commission is to serve the public through the licensing and regulating of real estate licensees and insure public confidence in real estate transactions. Also very troubling is that the Alabama Commission has no jurisdiction over HOAs or their management. HOA Managers are popping up all over and there is no regulation or oversight over their activities as well.
Since there are no substantial mandated HOA disclosure laws in Alabama, the challenge for the Agent is in obtaining and presenting information that has the potential to adversely affect a purchaser’s decision to buy. There is often a complete lack of cooperation on the part of Declarant, builders and even homeowner-managed HOAs. Homeowner controlled Boards share the same level of responsibility for disclosure and accountability as those that have not transitioned. Agents sometimes must simply fend for themselves. The but this does not mitigate their responsibility or lessen personal and professional exposure and accountability.
As previously stated, fueling these problems in Alabama is the lack of consumer protection and HOA management oversight. Until Alabama enacts comprehensive real estate specific consumer protection laws (with particular focus on HOA disclosure, management and accountability of funds) similar to those afforded by other states, Purchasers and Realtors are left to fend for themselves.
Please refer to the DFAFT purchaser addendum on the Realtor page available for download or
You can make your offer contingent upon receiving and
approving material information before you are committed to purchase
Don't be bullied into skipping this.
If the agent or seller says "NO",
Just say, "NEXT".
The Alabama Concerned Homeowners Alliance - All Rights Reserved
Not Affiliated with the State of Alabama
No content within this site is intended to serve as legal advice.
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You Don't Know What You Don't Know
Alabama is a dangerous place to purchase real estate. Be prepared.
Ask your REALTOR®/Buyer Agent how your interests are being protected.
Only use an adequately HOA trained professional who will represent & protect you.
ALABAMA CONCERNED HOMEOWNERS ALLIANCE