Protect Your Sellers in HOA Situations

Depending on the option chosen in Paragraph A of the Addendum for Property Subject to Mandatory Membership in A Property Owners Association (TXR 1922), a buyer may be able to terminate the contract within three days after the buyer receives the subdivision information (or until closing if closing occurs in fewer than three days). Some options in Paragraph A also stipulate that if a buyer does not receive the subdivision information at all, the buyer may terminate the contract at any time prior to closing. In either situation, the earnest money will be refunded to the buyer.

To protect sellers against lengthy periods when buyers can terminate based on this paragraph, agents can counsel their sellers to order the property owners association documents immediately after taking a listing. Doing so ensures the documents are received quickly, as procuring them can often take some time. Getting the documents quickly also lines up the buyer’s right to terminate after receiving the documents with the buyer’s option period. Even if a buyer forgoes an option period, having the property owners association documents on hand at the time of the contract execution will limit the buyer to three days in which to terminate and avoid a situation where a buyer has the right to terminate up until the closing.

Get an Expert’s Advice
Contact us at Belmares Properties for more information.

This is blog article was posted on March 02, 2020 | Texas REALTORS® Staff –

Legal Disclaimer: The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While Texas REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, Texas REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on Any legal or other information found here, on, or at other sites to which we link, should be verified before it is relied upon.