Homeowner
Associations (HOAs) and Condominium Owner Associations (COAs) play an important role in real estate transactions. In the Commonwealth of Virginia, the seller must provide the buyer with an HOA and/or COA resale packet. Therefore, buyers and sellers must know their responsibilities and rights regarding that resale packet.
The resale packet is usually very long…possibly 300-400 pages. While it is important for the buyer to review the packet, these pages include the Association’s budget for the year, minutes from past meetings and other items that may not be of particular interest to the buyer. At a minimum, the buyer should review the resale packet’s first five to ten pages. These pages will inform the buyer of any violations, such as the door being the wrong color, the wrong mailbox or a fence that was not approved. They will also let the buyer know the status of the association dues.
If violations are found and noted in the resale packet, the seller must correct them. This has already been agreed to by the parties in the “Title” paragraph of the NVAR contract. The buyer and selling agent should ensure that the seller and listing agent know the noted violations.
Regarding HOA/COA dues, the buyer needs to know the status for two reasons. First, the buyer needs to know if the seller is current regarding the dues so the buyer does not inherit unpaid dues from the seller. Second, the buyer needs to see the amount of the dues. These are usually paid monthly, quarterly or annually, and dues typically go up yearly. Dues will be prorated at settlement, and the title company will order an updated dues information sheet so neither party pays more or less than required. There are also HOA transfer fees that need to be considered because sellers will pay on their way out, and buyers will need to pay on their way in.
Besides reviewing the resale packet, the receipt of the packet from the association is important because, under Virginia law, the buyer has a three-day right to void the contract after receipt of the resale packet. For the seller, this makes it vital to get the documents to the buyer as soon as possible to get this contingency out of the way. For the buyer, the receipt of the documents starts the clock ticking on getting out of the contract, and thus, the review of the documents should be treated as very time sensitive.
Some homeowners can be accountable to more than one HOA and maybe even a COA. If there are multiple HOAs, a resale packet must be ordered from each. Again, these packets should be ordered early on in the process.
If there are questions regarding HOAs, COAs, resale packets or anything related to real estate settlements, please contact us here.