Ah! The Homeowner's Association (HOA). The butt of many jokes on TV and in movies, but more and more of us live in communities that have them.
As with most things in life, an HOA has rules that they need to live by and some obligations that they need to handle. There are also rules and obligations that the HOA imposes on the homeowners in the community.
If you're considering buying a home or condo that's covered by an HOA, you will get an HOA resale certificate. This is a required document in every state and will help protect, you, the buyer and the HOA.
What is an HOA resale certificate?
The Homeowners Association will issue a resale certificate that tells a buyer about the seller's standing with the HOA and the association's financial standing. It also shares some specific data about the property, including unpaid dues, fines, pending violations, and any fees that will be due at closing.
The information on the HOA resale certificate is a manifold:
- It lets the buyer know what the financial status of the HOA is. You don't want to get stuck with an HOA that owes a lot of money that you'll be asked to pay back.
- The resale certificate informs the buyer of what fines and fees are due from the property. While the ownership may change, the HOA puts its financial burden on the property. A buyer can be responsible for unpaid fees from the previous owners.
- It tells the buyer exactly how much will be expected from them at closing.
- There is information about pending litigation and any other upcoming potential expenses that might affect a homeowner.
The goal is simple: inform the buyer, protect the HOA, and let the seller be clear on their obligations to the HOA.
In the closing papers
The HOA resale certificate will be provided after a contract is signed but before the closing. In Nevada, generally, you have 5 days to review the paperwork and have the right to cancel your purchase during that timeframe.
Nonetheless, it's a required part of the paperwork at closing in every state. Make sure as a seller, that you get a chance to review it so there are no surprises and as a buyer, that you take time to read it in detail to guarantee that you aren't surprised in a few months with a massive bill.