Resale documents — an HOA’s best friend and what some speculate a homeowner's worst fear. Resale documents are considered to be one of the most essential elements of the buying process. They greatly influence both the seller's and buyer's roles. For better words, “you can’t live with them, but you can’t live without them.”
The primary purpose of having resale documents is to ensure the security of your new home or condominium. They are often combined to create a resale package that works as a security blanket filled with vital information necessary for those wanting to purchase a home or condo. A resale package may include the following:
Let’s pretend you're a sales executive (the homeowner) for a leading beverage company. You have a new boss (the potential homeowner) that just joined your team. They seem friendly and professional — as time passes, you build trust and a solid professional relationship. From time to time, you notice minor communication issues between the both of you, but not to worry — it’ll get better with time, right?
One day that the so-called perfect relationship shatters to pieces! You forgot to update your sales numbers for one of your biggest clients of the year! As you scramble to make corrections before the meeting, you can’t help but wonder, “was it you or your boss that was supposed to update the numbers?” Those minor communication issues that you thought were nothing to worry about take a turn for the worst. Not only did you lose out on one of the biggest sales of the year, but your boss has lost trust in your work.
In addition to the issues that we explained in our analogy, let’s discuss 5 other issues that are often faced when dealing with resale documents.
Litigations occur when either the HOA is suing someone or the HOA is being sued. If either were to occur, documentation of this occurrence must be provided in the resale package. This helps the buyer be aware of the HOA’s financial and legal current state. If a buyer were to come in to buy a home at the start of a pending litigation, documentation may not yet be available — as it may still be in the pending process of being updated to the resale documents.
Outdated bylaws are considered one of the most common issues that many HOAs encounter. “Sometimes changes in our social climate or state legislation require modifications or amendments within these governing documents.” The documents that lay out these rules and regulations are signed at the time of purchase. Yet, these rules are not always set in stone. Here, exercising an HOA’s best practices for drafting your governing documents is essential.
A resale package will often contain large extensive documents such as the CC&R and the communities bylaws. Both of which could include up to over 100 pages or more! HOAs that do not utilize digital formats or software may experience difficulties distributing large documents such as this — especially for homeowners and potential buyers who may need this information source for their resale package. Manually distributing these types of documents could lead to missing pages or, even worse, the chance of getting lost in the mail.
More times than not, miscommunication is often experienced with the distribution of the resale package. In most situations, the resale package is distributed by the buyer’s real estate agent but can vary depending on the state's laws and guidelines. “Some states require that the seller, or homeowner, pay for the resale package while others assign that financial obligation to the buyer.” The person who orders it is usually the person that pays for it.
Take, for example, Pennsylvania and Virginia — the seller is required by law to provide the resale package to the buyer — either the seller or their agent will request the package from the HOA. In parts of New York, the buyer will often request the package, and in places such as New Jersey, the buyer is the one who purchases the package.
The drawback with self-managed resale packages comes with the liability of mistakes or inaccuracy of information that could occur. In addition, self-managed resale packages are discouraged strictly due to the amount of legal knowledge needed to distribute properly. Not to say it’s not possible, but should be exercised by someone with experience and formal training. Some inaccurate information may include financials, the HOA’s legal status, pending litigations, or outdated bylaws.
As we mentioned in our analogy, we focused on five main areas of importance: relationships, transparency, communication, organization, and trust. These of which are all ways that can help combat issues when dealing with resale documents.
The relationships between a homeowner, real estate agent, broker, and buyer is critical to the process of buying a home. Due to the vast amount of information that is implemented into a resale package, it will be essential that your buyer can trust your work and feel confident working alongside your team.
Honesty plays a large role in being transparent. No buyer wants to be misled by inaccurate information or outdated sources. This will only lead to misjudgments and false accusations. A resale package requires disclosure of all relevant information — the purpose of this is so that the buyer can make an informed decision.
Communication helps foster trust and sets clear expectations. It also creates a sense of community for all homeowners and potential buyers. Poor communication can lead to misinterpretation or misunderstanding of information. As we mentioned in our analogy, the sales executive struggled to remember whose responsibility it was to update the sales report. Why is that? Primarily because they did not communicate or set clear expectations with those involved in the report.
As the saying goes, “work smarter, not harder.” You can never be too organized when it comes to resale documents. In fact, resale documents wouldn’t exist if there wasn’t some type of organization behind the process. Depending on the size of your HOA, it’s encouraged to consider outside sources and tools such as digital drives, dropbox folders, or digital software to store large sources of information that contain large files.
Third-party resources - These resources are provided by HOA property management companies that specialize in helping HOAs facilitate and organize resale packages for sellers and buyers. A benefit to using a property management company comes with the amount of liability that they provide during the process of distributing a resale package. “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.”
Trust is one of the most important commodities of creating a successful resale package. This may include those that manage your resale documents as well. When buyers and sellers trust those involved, they’re likely to respond more positively and have a stronger sense of communication.
Still need help navigating this complicated process? Try Community Archives, a TownSq Solution. Community Archives lets you navigate the HOA resale disclosure process faster and easier than any other platform on the market. Since its inception in 2010, we’ve delivered a fully personalized experience to approximately 90 management companies and have integrated nearly 23,000 communities. With 1.6 million orders placed on the Community Archives platform to date, we’re honored to be one of the top-performing resale service providers in the industry. Our suite of services includes everything from full-service preparation and shopper support, to document review, order fulfillment, and closing management. We take pride in building our products and services to provide you with greater flexibility in the resale space.