Home Sales Resources and Best Practices for HOAs
Key resources for HOAs managing home sales include governing documents, financial statements, and the resale package process, and understanding and maintaining these materials ensures smoother transactions and compliance with all legal requirements.
Key Documents and Information for HOAs
HOAs must be prepared to provide several crucial documents to sellers and prospective buyers, typically compiled into a “resale package” or “disclosure packet.”
Governing Documents
- Covenants, Conditions, and Restrictions (CC&Rs) - Outline the rights and obligations of homeowners and the association.
- Bylaws - Describe how the association functions, including election procedures, board member terms, and meeting requirements.
- Articles of Incorporation - The legal document that establishes the association as a non-profit entity with the state.
- Rules and Regulations/Architectural Guidelines - Detailed rules on topics such as pets, landscaping, parking, and home improvements.
Financial Documents
- Annual Budget and Financial Statements - Current and past budgets, income/expense reports, and balance sheets.
- Reserve Report/Study - Details the status of the reserve fund for major repairs and replacements (e.g., roofing, pavement).
- Assessment Schedule
- A clear breakdown of regular monthly/annual dues and any upcoming or special assessments.
Property-Specific Documents
- Resale Certificate/Demand Statement (Estoppel Certificate) - A legally binding document that details any unpaid fees, past-due payments, or outstanding violations tied to the specific property.
- Certificate of Insurance - Details of the HOA’s master insurance policy.
- Meeting Minutes - Recent board and annual meeting minutes.
Best Practices and Procedural Guidance
- Establish Clear Procedures - Have a standardized process for generating resale packages, including associated fees and turnaround times, to ensure efficiency and compliance with state regulations.
- Communicate with Sellers - Advise homeowners to inform the board or management company early in the selling process. Sellers are typically responsible for ordering and providing the necessary documents to the buyer.
- Ensure Accuracy and Currency - All documents provided must be the most current versions to prevent legal issues or delays in closing.
- Conduct Compliance Inspections - The HOA or management company may conduct an inspection of the property to identify existing violations that the seller must address before finalizing the sale.
- Utilize Technology/Software - Many HOAs use specialized software (e.g., HomeWiseDocs, TownSq) to automate the disclosure process, document storage, and record retention, streamlining transactions for all parties involved.
- Consult Legal Counsel - Because state and local laws vary, HOAs should consult with a legal professional or a knowledgeable real estate agent to ensure full compliance with all relevant regulations.
Educational and Support Organizations
- Community Associations Institute (CAI) - A leading source of information, offering a wide range of educational resources, online training, and events for HOA board members and managers.
- HOA-USA - Provides free resources, including educational articles, board training videos, and directories of HOA industry experts.
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