If the property under contract has an HOA there’s things to know!
FIRST, WHAT IS A RESALE CERTIFICATE?
The resale certificate’s primary purpose is to verify that the buyer knows all the necessary information about the HOA community before closing. This includes knowing the sellers current standing with the association and if there are any outstanding balances. The resale certificate comes in a package that also shares the governing documents. These give critical information about the community for the buyer to understand before going through with the purchase.
WHAT IS IN THE PACKAGE?
Most packages include the following, although there could be slight differences in each community:
- Annual financials
- Articles of Incorporation
- Bylaws
- CC&R (Declaration of Covenants, Conditions, and Restrictions)
- Architectural guidelines
- Resale certificate
- Insurance certificate
- HOA meeting minutes
- Reserve report
- Resol
WHAT TO REVIEW
There are two main parts the the resale certificate package, so while reviewing you want to verify you’re looking at both.
FINANCIAL: If the community is not in good financial standing, or if the seller has a balance with the HOA these documents will let the buyer know. Why is is good to know? Well, if there is a balance due by the seller, the community could have a lean on the property. This lean can in turn effect the Title policy and closing. In most cases, the balance can be paid at closing to release the lean & the title is clear for the buyer, but in others the buyer becomes responsible for paying the sellers dues!
DOCUMENTS: These include the bylaws as well as any covenants, conditions, restrictions, rules, and/or regulations the community has. This can be anything from the colors you are allowed to paint the exterior of your home, to the type of plants you are allowed/not allowed to plant. Review all of these to see if there are any areas that concern you, or that would hinder the way you plan to live in your home.
Don’t worry you don’t have to navigate this alone! This is one of the many tasks that your agent helps you with while under contract. If you are looking for your own trusted agent in Texas , I would love to meet to discuss how I can be that for you!
