HOA Resale Package: What Is It And What Does It Include?

Q: What is a Resale Certificate?

A resale certificate consists of essential information about the home being purchased. Typically, this certificate outlines any outstanding dues to the HOA, pending or unpaid violations, outstanding special assessments, and fees that are due at closing.

Q: What are the Governing Documents?

The association's governing documents make up the second part of the resale package. These documents consist of the CC&Rs or declaration, the bylaws, the articles of incorporation, and the rules and regulations. Sometimes, they can also contain the community plat or map.

Q: What is the Purpose of an HOA Resale Package?

The main objective of the resale package is to provide protection to three parties: the buyer, the seller, and the HOA. For sellers, the resale package gives them a chance to disclose all pertinent information regarding the home and the HOA. In turn, this works out for the HOA as it minimizes the financial risk. For buyers, the resale package prepares them for what they are potentially buying into. The package offers them a glimpse of how the HOA works. It lets them know of the HOA's rules, which may not sit well with the buyer.

Q: How Long Does a Resale Package Take to Produce?

The timeframe of production can vary greatly from one community to another. There are also some states that require a specific timeframe by law. In general, though, HOAs must produce the resale package within five to 15 business days of receiving the request. Potential buyers must also review the provided package within a specified amount of time before making a final decision on the transaction.

Q: Who Pays for the HOA Resale Package?

There is no universal answer to the question of who pays for the resale package. Sometimes, the buyer will pay for it, while other times, the seller will pay for it. It generally depends on the agreement between the parties. However, there are customs in certain areas that may dictate the party responsible for paying the cost of the resale package.

The HOA resale package plays an important role in the sale process of a home in an HOA community. Both buyers and sellers should understand what a resale package is and what its contents are. Similarly, board members and community managers alike should prepare themselves to provide this package when faced with a request.

What is an HOA Resale Package?

An HOA resale package consists of two primary components: the resale certificate and the association’s governing documents. The resale certificate contains pertinent information about the home and HOA — information that potential buyers must know. Meanwhile, the association’s governing documents give buyers a look into the operations and rules of the community.

What is a Resale Certificate?

A resale certificate contains essential information about the home being purchased. Typically, it outlines any outstanding dues to the HOA, pending or unpaid violations, outstanding special assessments, and fees that are due at closing.

It can also contain information about the HOA itself, including any pending litigation, planned capital expenditures, and reserve fund amounts. In some cases, it can also include information about the voting the HOA utilizes.

Some states have specific requirements for what to include in a resale certificate. For example, in Pennsylvania, the requirements are under Title 68 of the Consolidated Statutes.

It is important to note that the resale certificate has other names. These include closing statement, dues statement, demand letter, payoff statement, resale demand, estoppel, escrow demand, statement of account, and status letter, among other terms.

What are the Governing Documents?

The association’s governing documents comprise the resale package’s second part. These documents consist of the CC&Rs or declaration, the bylaws, the articles of incorporation, and the rules and regulations. Sometimes, they can also contain the community plat or map.

In some cases, the governing documents include a copy of the reserve study, board meeting minutes, insurance documents, resolutions and policies, and other financial reports. These documents allow buyers to examine the association’s inner workings and financial health more closely. If the buyer does not like what they see, they can reconsider the sale.

What is the Purpose of an HOA Resale Package?

The main objective of the resale package is to protect three parties: the buyer, the seller, and the HOA. The resale package allows sellers to disclose all pertinent information regarding the home and the HOA. This works out for the HOA as it minimizes the financial risk.

The resale package prepares buyers for what they are potentially buying into. It offers them a glimpse of how the HOA works and informs them of the HOA’s rules, which may not sit well with the buyer.

It also allows them to gauge the HOA’s financial health and make an informed decision. For instance, if the HOA’s financials signal poor budgeting and planning, it could lead to a large assessment. This may not be ideal for the buyer, allowing them to back out of the sale.

Furthermore, the resale package contains information on the home, such as outstanding dues and pending violations. These obligations may transfer to the buyer, and disclosing such information allows them to reconsider or negotiate with the seller.

When Does the Buyer Get the HOA Resale Package?

In general, the buyer or seller requests the resale package following the signing of the purchase contract. Sometimes, the seller will already have some pertinent documents, such as the governing documents. In such cases, the seller can provide the buyer with the documents ahead of time. Some realtors and listing agents also ask for bits and pieces from the HOA management company.

How Long Does a Resale Package Take to Produce?

The timeframe of production can vary significantly from one community to another. Some states also require a specific timeframe by law. In general, though, HOAs must produce the resale package within five to 15 business days of receiving the request. Potential buyers must also review the provided package within a specified amount of time before making a final decision on the transaction.

Ordering the resale package ahead of time is crucial to avoiding delays in the sale process. Similarly, HOAs must abide by the required timeframe to avoid penalties. Hiring an HOA management company can help streamline the process and ensure the package is delivered on time.

How Much Does the HOA Resale Package Cost?

The cost of the HOA resale package can also vary depending on the state and community. Some states have a legal limit on how much an HOA can charge in fees to produce this package. In addition to state laws, an HOA’s governing documents may also stipulate a cap on how much the association can charge.

Preparing resale packages can take time and resources. As such, buyers and sellers should not be surprised that it comes at a cost. That said, this cost is an investment in the long run, given the importance of the resale package. This package offers protection from liability for all parties involved. It promotes transparency in the real estate transaction process and ensures everyone is on the same page.

Who Pays for the HOA Resale Package?

There is no universal answer to who pays for the resale package. Sometimes, the buyer will pay for it, while other times, the seller will. It generally depends on the agreement between the parties. However, customs in certain areas may dictate which party is responsible for paying the cost of the resale package.

Buyers and sellers can include the financial obligation in their negotiations. For example, buyers can agree to pay for the resale package if the seller settles the unpaid dues on the home. Negotiation powers and tactics can also differ depending on whether it’s a seller’s or buyer’s market.

The Bottom Line

The HOA resale package is vital to home sales in a homeowners association. Buyers and sellers should familiarize themselves with its contents, the timeframes required to provide it, and the associated costs to produce it. In the same way, HOA boards must understand the ins and outs of the resale package to ensure compliance.

Clark Simson Miller offers expert HOA management services, including assistance with resale packages. Call us today at 865.315.7505 or contact us online to learn more!

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