by Unkown
In real estate transactions, a buyer is entitled to all information that significantly affects the enjoyment and livability of the purchase property. This is often referred to as resale disclosure information. In many states, the seller is required by law to provide such information in writing to prospective buyers prior to closing. Unfortunately, many states fail to include information a buyer of community association property needs to know.
So, what's the big deal? Owners in community associations have unique obligations that single family home owners do not and much of it involves substantial financial liability. Here is a Ten Point List of items that a buyer of property within a community association needs to make an informed decision:
- Information on any special assessments that have recently been or will soon be approved.
- Copy of the current year's budget, the monthly fee for the property being purchased and the status of the owner's account;
- Amount of funds in the reserve account for major repairs and replacements.
- Copy of the most recent year end income and expense statement.
- Status of any litigation which could impact the purchase property.
- Details on the association's insurance coverages.
- Any violation of architectural guidelines that could impact the purchase property.
- Copies of the governing documents, rules and architectural guidelines.
- Copies of most recent year's approved meeting minutes.
- Copies of most recent year's association newsletters.
Much of this information is, or should be, maintained and provided by the association and available at an owner's request. One argument for not providing it is that buyers typically don't read it. It's a dangerous presumption that buyers typically don't read or heed disclosure information. Real estate transactions are complex by their nature. That's why most buyers and sellers use trained professionals like real estate agents, escrow officers and attorneys to assist them. These buyers and sellers rely on these professionals to advise them on the critical issues. A buyer's understanding of real estate law is not critical but understanding the impact of resale information is.
Another reason resale information is not readily available is because many associations handle their business, frankly, in an arbitrary and haphazard way. Many don't even have the information to disclose. Disclosure for those boards is a source of embarrassment and personal liability.
All states need a Resale Disclosure Certificate that includes the information unique to community associations. Failure to advise a buyer a significant information creates unnecessary hardship on the buyer and potential liability for the seller, Board, association and real estate agent. On the other hand, a properly informed buyer is more likely to be a supportive member of the board and community. Resale disclosure for community associations...its time has come.
