There’s no surprise in saying that buying a home is a HUGE responsibility. In fact a large part of buying a home comes with all the paperwork and legal documentation. One of which includes your community's resale package — one of the most important sources of information that helps with ensuring the security of your new home or condominium.
A resale package will often contain vital information provided for those purchasing a condominium or home that is part of an HOA. Packages may include:
The primary purpose of having a resale package is to insure that all necessary information is provided to the buyer by the seller before closing — it also protects both the buyer and the seller in multiple ways.
Although the resale package process may vary by state, the same type of information and documentation will often be required.
A resale package will often include a resale certificate, otherwise known as a closing statement, estoppel, dues statement, paid assessment letter, 3407 or 5407. The resale certificate works as a financial overview of the HOA — this includes a seller’s current standing with the association. A resale certificate also provides important information regarding the property being sold. Other required information may include:
What’s the purpose of having a resale certificate?
The purpose of having a resale certificate is to provide a sense of security and protection to all parties involved.
What happens if the seller isn’t up-to-date on their payments?
If a seller is not up-to-date on their payments, a resale certificate can be utilized as a source of documentation to inform the buyer that they may become responsible for paying off the seller's dues. The resale certificate also reduces liability on the HOA for any unpaid dues accumulated by the seller.
The second most important part of a resale package are the governing documents. They may include:
What to consider when reviewing your resale package?
An HOA property management company will greatly benefit an HOA during the completion stage of finalizing a resale package and certificate. Not only does the property management company work as a protective shield for the HOA, but it also helps regulate and monitor the process for any errors or inaccurate information. A property management company may also include a fee for managing the process of organizing a resale package — prices may vary by state and the property management company.
Completing the certificate - If a property management company is provided, they are usually the ones to complete the certificate as a service to the client. If any errors or inaccuracies occur, the management company is often held responsible — they may be obligated to pay the community the amount that was not collected at closing. They may also be obligated to inform the homeowner that an error was made on their behalf.
If a property management company is not provided, it then becomes the responsibility of the HOA board or community manager to provide the resale package. In most cases, a community will often have a designated person such as a: board member, clerical staff member or community manager handle all necessary documents related to the resale package.
In the event that an HOA board member or manager has to complete the certificate, a large liability is not only put on the HOA, but the persons involved with completing the certificate. All parties involved will be held liable for any errors or inaccuracies.
Depending on the state, the standard process can take anywhere from 5 to 14 calendar days. Some states may even require a specific number of days for the package to be completed and distributed.
Resale packages might seem complicated, but they don’t have to be and serve a very important purpose at the end of the day, ensuring that you have a seamless closing/selling in a managed community.