How to Combat 5 Issues you Face when Dealing with Resale Documents

How to Combat 5 Issues you Face when Dealing with Resale Documents

Homeowners’ associations (HOAs) are booming in popularity across North America—the number of HOAs is projected to grow by 3,000 in 2024. Many buyers are seeking to move to managed communities for their countless perks, such as exceptional amenities, elevated property values, and camaraderie. While it’s ultimately worth it, the process in buying a home with an HOA can be intimidating and confusing, as more steps need to be taken and more documents need to be reviewed, including HOA resale documents. Read on to learn more about these critical documents and how to prevent common problems that may arise when dealing with them.

What are HOA resale documents?

HOA resale documents, also referred to as an HOA resale package, are a set of important documents provided to buyers when purchasing a property in an HOA. HOA resale documents are typically required by law to be distributed before closing so buyers know the exact financial situation of the community and can make educated decisions. It varies by state and community, but HOA resale documents contain information specific to the property and association as a whole, including:

  • Closing fees
  • Pending property violations
  • Unpaid violations or dues
  • HOA financials
  • Articles of incorporation
  • Bylaws
  • Covenants, conditions, and restrictions (CC&Rs)
  • Architectural guidelines
  • Resale certificate
  • Insurance certificate
  • HOA meeting minutes
  • Reserve reports
  • Resolutions and policies

What is the purpose of having HOA resale documents?

The primary purpose of having resale documents is to ensure the security of the HOA, buyer, and seller. HOA resale documents provide proof of the seller’s current standing with the HOA, and offer transparency to buyers regarding open balances, violations, and fees that could become their responsibility. These documents also protect the HOA from financial risk and conflict.

5 common HOA resale document problems

While necessary, HOA resale documents can come with some issues. Here are five common problems that may arise when dealing with resale documents:

1. Pending litigations

‍Litigations occur when the HOA is suing someone, or the HOA is being sued. If either were to happen, documentation must be provided in the resale package, so the buyer is aware of the HOA’s current financial and legal state. If a buyer were buying a home at the start of a pending litigation, proper documentation may not yet be available. To avoid this issue and give a correct picture of the situation, leaders or managers should update documents swiftly.

2. Limited access to large files

Resale packages usually contain extensive documents—CC&Rs and bylaws can exceed 100 pages. Because of the significant file sizes, it can be difficult for HOAs to efficiently share these documents. If manually distributed, pages can go missing, or packages can get lost in the mail. Best practice is to use a dedicated HOA management software, like TownSq, to store large sources of information and promote organization.

3. Inadequate document management

‍Self-managing resale documents is strongly discouraged, as this increases the chances of mistakes and liability. To protect all parties involved in a transaction, ensure resale packages are handled by experts with experience and formal training.  

Many professional community management companies have specialized employees, resources, and processes to help HOAs facilitate and organize resale packages for sellers and buyers. Plus, if any errors or inaccuracies occur, the management company is often held responsible for payment and communication, not the HOA.

4. Unclear guidelines  

When it comes to HOA resale documents, every state has different rules, and it can be hard to keep up with them. In most cases, the resale package is distributed by the buyer’s real estate agent, but this can vary depending on the state's laws and guidelines. Plus, some states require the seller to pay for the resale package, while others assign the financial obligation to the buyer. Set clear expectations and confirm you have a sound understanding of relevant guidelines when working with resale documents. As always, seek legal assistance if needed.

5. Outdated bylaws

If a bylaw is outdated or no longer serves the community well, most HOAs have the power to modify or amend it. Since governing documents may constantly change, it’s important for potential buyers to receive the most up-to-date copies in a resale package. No buyer wants to be misled by inaccurate information or outdated sources. Before sending a package, take the time to double-check that the most updated version is included so that the buyer can make an informed decision.

Manage HOA resale documents with TownSq

Effectively managing HOA resale documents is essential to the success of any HOA. This task can be complicated, but Community Archives makes navigating HOA resale disclosures faster and easier than ever. Since its inception in 2010, Community Archives has delivered a fully personalized experience to approximately 90 management companies and integrated nearly 23,000 communities. Community Archives’ suite of services features everything from full-service preparation and shopper support to document review, order fulfillment, and closing management.