documents | hoa demand letter

Homeowners are often surprised to discover additional fees and documents that are required before they can sell their property. For those who have received an HOA demand payoff letter, know that you are required by law to submit this requirement. To make the process clearer, here’s what you need to know about an HOA demand payoff letter.


What Is an HOA Demand Payoff Letter?

If yoletters | resale certificateu are selling a property that is governed by an HOA, there are additional requirements before you can close the sale. First, sellers must order and pay for a resale certificate.

A resale certificate will provide potential homebuyers important information about the HOA. The resale certificate or package may include the following official association documents:

  • Governing documents including CC&Rs, bylaws, articles of incorporation, HOA rules and regulations, and amendments
  • Financial records including account ledgers, budgets, expenditures, financial statements, reserve funds, and insurance policies
  • Board meeting notices, minutes, and election documents
  • Vendor contracts and bids
  • HOA membership list

Once the escrow company has an interested buyer, they will then request for an HOA payoff demand letter. Keep in mind that this document is different from an HOA demand letter for unpaid assessment dues as well as a demand letter that homeowners send to their association.

The demand payoff letter certifies that the seller has paid for all the HOA dues tied to the property. This typically includes:

  • Unpaid monthly association dues
  • Late charges, interest, and cost of collection
  • Fines for HOA violations
  • Fee for transferring ownership
  • Move-in fees


Why Do You Need an HOA Demand Payoff Letter?

In most cases, resale certificates and demand payoff letters are required in compliance with a state’s disclosure laws. If you are selling a property within an HOA’s jurisdiction in South Carolina and North Carolina, you must also submit a disclosure statement prior to forming a real estate contract.

The purpose of these documents is to protect the interests of prospective buyers. For instance, if the seller did not settle all their association dues, the HOA can place a lien on the property. The HOA payoff demand letter ensures that this does not happen — and protects the buyer from having to pay to resolve the lien.

If the seller is unable to provide the demand payoff letter and other required documents, the buyer has the right to rescind the purchase of the property. After receiving the documents, the buyer is given about five to seven days to review the documents. Within the review period, the buyer also has the option to cancel the contract.


Who Pays for the HOA Demand Payoff Letter? How Much Does It Cost?

cost | hoa demand letterIn most states, the seller is responsible for paying the HOA demand payoff letter. However, make sure to double-check because some states, like Arizona, will have the buyer pay for these fees at closing.

The cost of an HOA demand payoff letter will depend on your HOA and the third-party company that they are using. In general, though, the demand payoff letter may cost anywhere from $100 to $500. If you are rushing to meet the closing date, the cost may be even higher by $200 to $400.

Don’t forget to check with your state because some states have a cap on how much to charge for the demand payoff letter. For example, in Arizona, there is a maximum limit of $400.

To lower the cost, make sure to submit the request form for an HOA payoff demand letter well in advance of the closing date. You should have this document ready so that there are no problems with closing the sale on the agreed-upon date.

There are also other ways to lower the cost of a demand payoff letter. For instance, if you still have access to the member portal, you will be able to download copies of your HOA’s CC&Rs, bylaws, articles of incorporation, annual budget, financial reports, and other documents. You can also visit the county recorder’s office to procure HOA documents that are being stored as public records.


Settle the Demand Payoff Letter for a Smoother Transaction

If you are selling a property in an HOA, the demand payoff letter cannot be avoided. Now that you have a clear understanding of its purpose, you can start ordering all the necessary documents to ensure that the selling process goes smoothly. You won’t want to experience any issues that could jeopardize the sale of your property. Once the HOA demand payoff letter and other required documents are settled, the escrow company will then take care of everything else.

If you need help with financial management for your HOA, give us a call at 865.315.7505 or email us at