Six months after purchase our home we learned that all the townhomes in our community had a severe exterior cladding issue whereby the HOA had known since 2005 that there was a problems but failed to act and failed to disclose and chose to bandaid the problem thereby compounding it to the point that all exterior material must be removed down to the interior studs. It was documented that inspectors as early as 2005 stated that there was a severe problem and it must be disclosed to homeowners and potential buyers. It was not and the HOA with their attorneys rewrote the bylaws to further cover up their negligence. What is our recourse for fraudulent misrepresentation?
Real Estate Attorney
This is not an easy issue. First of all there is a statutory duty for the HOA to disclose those items required by section 5407 of the Uniform Planned Community Act. Rather than making this a 54 page response, Google the Act (the citation is 68 P.S. 5407) and read the list.
Before we get lost discussing the difficulty of proving fraud against the HOA, consider that your seller had to know. Also consider that a law suit against an HOA by a property owner is suicidal in nature. While the suit is pending there will be no sales and no refinances within the community. If you are the Plaintiff you will have to hide from your neighbors. You will be safer in a tent in the middle of route 202, than in your house. That's the good news.
If you win the suit, every owner will be pro-rata liable for the judgment. The association will have participated in a "lawyers full employment" opportunity. While this might afford you a drink or two at Iron Hill Brew Pub on the tab of a lawyer or two, the problem is that the cost of the lawyer will again be spread among ALL owners. What does this mean? The special assessment that the HOA was going to pass to cover the cost of repairs, will now have to be doubled to cover the lawyers and costs of litigation.
You could find any number of lawyers hot and ready to throw you into litigation. Find a lawyer who: 1) knows something about "failure to disclose" litigation, 2) is able to view your problem from 40,000 feet, 3) is able to play three dimensional chess 5 moves out, and 4) doesn't need to take your case in order to meet next week's payroll.
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