What are the ramifications of seller not disclosing HOA

Bought a home in Dec. 2016. In March of
2017 a packet was put in my mailbox
containing HOA documents. We were never
told of HOA. Our agent contacted head
of HOA and was told seller knew because
they paid HOA dues so they could sell
it. Talked with a independent title
company who happened to do the research
on my home and sent me an email
regarding the restrictions that clearly
showed HOA but settlement company did
not include that at signing.

Asked on June 14, 2017 under Real Estate Law, Virginia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

It may be fraud, and, if fraud, could potentially provide a basis for undoing the transaction or seeking monetary compensation.
Fraud is a knowing or intentional misrepresentation (a lie, including by omission when the reasonable expectation is for dislosure) of a material, or important, fact, made to induce (or cause) the other person to enter into the transaction or do something (like buy a house), and upon which the other person *reasonably* relied.
Logically, the seller would have known of the HOA, so this is almost certainly a knowing misrepresentation to not disclose it; since the HOA will impose rules and costs, its existence is material or important; and failing to disclose it presumbly or logically was done to make it more likely for the buyer to buy. Therefore most of the requirements for fraud appear to have been made.
The key issue remainining is: was the buyer's reliance on the nondisclosure "reasonable"? That means that if there were facts or evidence or circumstances which should have warned the buyer that there was an HOA--or at least reasonably may have been one, so he or she should do more research to see if there was an HOA--then the reliance was not "reasonable," since the buyer could have independently determined there was no HOA and therefore not relied on the misrepresentation. 
If this was a condo community, a gated community, or some other obviously planned or self-contained community of the type which typically has an HOA, then the buyer should have known or reasonably suspected there was an HOA and not relied on the nondisclosure: there would be no fraud.
On the other hand, if this was NOT the sort of neighborhood or community which would normally have an HOA and there was no reasonable reason for the buyer to suspect there was one, then this may have been fraud and the buyer may therefore have legal recourse.

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