Contract trivia. Shawna has some HOA questions, she’s going to ask some quick questions, and you guys are going to respond. I’m going to give you one scenario.
Let’s get ready, Shana.
Ok? Here’s the scenario you guys get ready. You’re you represent the seller, OK? The home is under contract and it just passed the HOA deadline. Ok. You represent the seller. The seller just received a notice that their dues for next year are going to increase by five percent.
So, of course, the communication has been given, and you’ve conveyed that to the buyer, you’re past the deadline. Does the buyer have any recourse to this? Can they terminate the contract? Yes or
No? It’s after the deadline.
After the HOA deadline has passed,
There’s a change to the HOA.
The HOA dues are going to be or they will be giving a notice last minute that the dues are going to be changed. They’re going to go up five percent. Hmm. In your past, you’re like, oh, now what?
So do you tell them that you’re asking, do you tell
Them you have to tell you,
Tell them, what do they have recourse to get out of the contract? Yes, because the
New information, even though your past, you’ve received everything and you’re past the deadline, you’ve been given the hot docs. This is just new found information that you’ve been
Given between one between when it closes and between when that deadline passed. Yes, I’m going to say no.
Ok. Quickly. I’m only going to take the quick answers. All right, so. Do you want to go to Omkar and then we come back, this is new, you guys, so. Or do I want to give them a minute?
No, you just said it was going to be quick. Ok, so they have to participate. Ok.
The answer is yes, you do have recourse. So if Omkar will slide the hoi addendum over, we will show how they have recourse. So if you go down to B, paragraph B of the Hoya addendum says material changes, if seller becomes aware of any material changes in the subdivision, information seller shall promptly give notice to buyer.
Buyer may terminate the contract prior to closing by giving them written notice, given written notice to seller if any of the subdivision information provided was not true.
Any material or any material adverse change in the subdivision, information occurs prior to closing and the earnest money will be refunded to the buyer.
So I would define material as a substantive item and that’s open for interpretation of what the word material means.
Yes, it is. And I just use that.
I don’t believe that five percent is a material change. I would say material change in my purse, But there’s no definition of material change here.
I understand what I’m saying. No, it’s not. That’s my definition of material change is that’s not a material change. Five percent increase.
Ok, well, I believe it is something different than what has been disclosed to you.
So it’s a change to me. A material change would be that we found out there’s been embezzlement and everyone has a twenty five hundred dollars minimum one time allocation that they have to put in.
That’s material that is normal and consistent to me to have a five percent increase in HOA dues.
Ok, well, let’s look up in a definition of material.
Yeah. In fact, what we’ve had is the cost of living index is going up dramatically to seniors. Did you know that they got a huge increase on their Social Security this year? Cost of living increase because there’s been inflation, so five percent is merely keeping up with inflation this year.
So to me, it’s not material change, it’s consistent. And I could take that stance and make that argument. And that point doesn’t mean I’d be right.
So there are several definitions to the word material. The one I see important, essential, relevant that is relevant for them to know that it changed, right? Because it’s something different than was disclosed to them in the beginning.
Facts, information or ideas for use in creating a book or other work and the matter from which a thing is or can be made. Ok, that’s a noun. So important, essential. Relevant. So I don’t know. I believe the answer is yes, because something has materially changed from the beginning to now.
All right. So Stacey Chat in , that it can change the ratios for the loan
Five percent if you are, if you are that strapped
Razor thin, because that would be five percent of the holdings
Home on my radar because. The likelihood of it coming available at some point in time future.
Well, so that’s a good topic. I appreciate it, Shana, that you brought that up, discussed it through with us and the definition of material would be a key item there.
And not that one. So, you know, there’s a lot of things that could affect this. You could take either side on that when I kind of think but.
I don’t know. I try not to overthink things or which I do, but I try to just look at what the contract says and this is what we preach all the time. But you can see where someone could have a case like you for. Really? Is it? It didn’t say substantial. It’s a material.
So I think if it said, I don’t know. I think that word in contracts reply implies something substantive. Not that we changed our board meetings from the first Thursday to the first Tuesday. That’s a
Change. It should say a monetary change, probably, but. I don’t know. I’m headed to California today to attend the in-air convention, so when I attend the MLS meeting or the contracts meetings in our Texas forums, I’ll bring them up. Ok, sounds good to me, so thank you for going over there.