An estoppel letter is a legally binding document that certifies the amount of money a home seller...
When selling your home, many documents and disclosures are required. It can get overwhelming. That is why it is important to be sure you are working with a knowledgeable real estate agent and title company to ensure everything goes smoothly.
If you're planning to sell your home, this article will help you understand more about the association's roles and steps to a successful closing.
The Role of Your HOA in the Home-Selling Process
One of the association's primary responsibilities is providing essential documents, such as the community’s rules, CC&Rs (Covenants, Conditions, and Restrictions), and fee disclosures, which give potential buyers a clear understanding of what living in the community entails.
Additionally, the association ensures your property complies with neighborhood standards, helping you avoid costly delays or last-minute issues. They also contribute to the overall curb appeal of the community by maintaining common areas and shared amenities, making your neighborhood—and your home—more attractive to buyers. A well-managed HOA can be a significant asset when it's time to close the deal!
Steps to Selling Your Home in an HOA
Selling your home within an HOA community requires careful planning to ensure a smooth process. Follow these steps to make the transition seamless:
Hire a Real Estate Agent Familiar with HOAs
Choose an agent who understands the ins and outs of HOA communities. They’ll guide you through the unique requirements and help communicate HOA-specific details to prospective buyers, making the entire process more efficient.Check HOA Due Requirements When Selling Your Home
Before listing, confirm any outstanding balances or special assessments. Staying on top of HOA due requirements when selling your home ensures there are no surprises that could delay closing. This step can also provide clarity on what buyers will inherit regarding ongoing dues or fees.Request and Review Required Documents
Work with your HOA to gather critical documents, such as CC&Rs, financial statements, and bylaws. These are often mandatory for buyers to review and can answer many questions upfront, streamlining the process.Prepare for Potential Buyer Requests
Buyers may ask about HOA regulations, amenities, or neighborhood compliance. Be ready to address their concerns by having the right information handy, showcasing your home and community as a great investment.
What Should You Disclose about the Community Association When Selling Your Home?
As you prepare to sell, your realtor and title company will ask you to provide information and sign off on various disclosures.
Most potential buyers will want to see the association's governing documents and that house improvements, like a pool or a shed, received approval during their short option period.
Your real estate agent will likely ask you to provide these as you are listing your home for sale so that they can be provided to potential buyers upon request.
Disclosure Documents
Your real estate agent or title company will likely ask you to sign various disclosures about the association throughout the sale.
However, the primary disclosure document, related to the association will likely be requested by the title company and completed by the association’s management company.
This disclosure document is sometimes referred to as a Resale Certificate, mortgage questionnaire, or Estoppel depending on the specific requirements in your area and any special requirements from your mortgage company or title company.
Furthermore, these disclosures will entail all the necessary information you need to inform the buyer, like the impending monthly HOA, Condo fees, or any assessments due.
The document will let the buyer know what the association might ask of them after a change of home ownership.
It should also have restrictions regarding the properties under the association. The new homeowner should understand the limits in the new home, like maintenance responsibilities and expectations, to avoid any future concerns or violations.
Financial Reports Documents
The important financial documentation that the association will likely be asked to produce with these disclosures are;
- The monthly maintenance fees and the association charges.
- For the insurance policy and condos or townhomes, the mortgage company will likely require a custom Certificate of Insurance that lists them as additional insured.
- Records of home improvements approved by the association for your home or unit.
- The current association financial statements and budgets.
- Recent meeting minutes.
- Percentage of delinquent units.
- Percentage of rented units.
- And more…
Gathering these documents and filling out these various disclosures is time-consuming and can be difficult; as a result, the management company will typically charge a fee for these disclosure documents depending on what and how much is required.
These fees are sometimes capped in various states. An average turnaround to gather this information is between 7-10 days.
There are also usually additional fees if they are requested or ordered at the last minute so be sure to communicate with your real estate agent and title company that they are ordering them well in advance and not waiting until a few days before closing to get the final disclosures ordered.
What to Bring to the Closing Table
The day is finally here, and you are ready to sell. Call to confirm with your title company that they have everything needed.
Assuming the answer is yes, be sure and carry a government-issued ID and a check to confirm routing numbers to your bank account. The best way to sell your home is to stay organized and ensure all required documents are in order.
Essential Tips for Selling Your Home in an HOA
Selling a home in an HOA requires a strategic approach. Start by hiring a real estate agent experienced in HOA communities—they’ll know how to navigate the unique requirements. Confirm all HOA fee requirements when selling your home, ensuring no outstanding fees or special assessments hinder the process.
Request and review key HOA documents, such as CC&Rs and fee schedules, to provide to potential buyers. Finally, be ready to address buyer questions about HOA rules, fees, and amenities. By staying organized and proactive, you’ll make the selling process smoother and more appealing to prospective buyers.
Bottom Line
When selling your home, expect to have disclosures to review related to the association. . Be sure to select qualified and professional real estate agents and title companies. This will make the whole process easy and transparent. Take the time to review our resources to ensure you're fully prepared for a smooth home-selling experience.
