Don’t Let HOA Documents Slow Down Your Sale

The facts below pertain to California law but are equally relevant here in Arizona. It’s the rare Phoenix Valley property that is not located in an HOA, these are usually homes in older neighborhoods or outlying areas and “county islands”. Most Home Owners Associations are in no great hurry to produce the required documents for a home sale. Often they are received at last minute or it’s necessary to chase them down. The challenges that can arise when dealing with HOA documents can delay a home sale significantly. This is where a dependable Title Company is invaluable, and I can tell you, I have countless times relied on the knowledgeable folks at Pioneer Title Agency to explain something to me or to sort out the mess that is Home Owner CC&Rs. ~Bill

Don’t Let HOA Documents Slow Down Your Sale.

By Sandy Hedberg
There are several advantages to owning a property managed by a Homeowners’ Association (HOA) – you may not have to worry about exterior maintenance, you might have access to a pool you don’t have to clean yourself, and condominiums and townhomes in particular are often priced lower than single-family homes, making ownership more accessible. These properties are often part of a larger community of home owners governed by bylaws and Covenants, Conditions and Restrictions (CC&Rs) enforced by the HOA.

Because of this unique relationship, when the owners of a home governed by an HOA decide to sell, they are required, by California law, to provide certain documentation to the Buyers. These documents must be delivered to the Buyers within the time frame specified in the California Residential Purchase Agreement (CA RPA).

As your escrow partner, we’ll work with you to make sure these documents are requested or ordered in a timely manner so the Buyers can review and approve them on time for the purchase to proceed.

We’ve compiled a list of the required documents as a helpful resource for you.

The California Civil Code requires the following HOA documents to be provided by the Sellers to the Buyers:

» Articles of Incorporation
» Covenants, Conditions & Restrictions (CC&Rs)
» Bylaws
» Operating Rules
» Restrictions based on age, rental use, etc.
» Annual Budget
» Reserve Funding
» Financial Statements of the HOA
» Assessment Enforcement Policies
» Insurance Summary
» A statement regarding the HOA’s current regular and special assessments and fees
» Any emergency assessment information
» Notices regarding defects to units or common areas
» Any pending change to the HOA’s regular or special assessments
» Notice of any unresolved violations of the governing documents
» A current statement of account for the property in question

In addition to the items above required by law, the CA RPA also specifies the following items that must be provided to the Buyers:

» Disclosure of any pending or anticipated claim or litigation affecting the HOA
» A statement regarding parking and storage spaces
» Copies of the most recent 12 months of HOA minutes for regular and special meetings
» Contact information for all HOAs governing the property

The HOA usually charges a fee, payable up-front, to obtain copies of these documents and will not release them to escrow until payment has been received. The costs can be significant, often upwards of $500 per association, and if there is more than one association affecting the property, escrow will need a complete package of documents for each association.

Your escrow company will contact the management company for the HOA to determine their fees, costs and acceptable method of payment. In order for us to help everyone abide by the time frames required, make sure to provide complete information on the HOA and its management company to your escrow officer, who will take it from there!