Here is a great information article written by Jim Goldsmith. Esq. It really gives us some great information about what people need to look for when they are dealing with Condos or Home Owner Associations.————-
If your transaction involves a homeowners’ association, you need to know what’s required by the Uniform Planned Community Act.
In a condo resale, an owner must provide to the buyer a Certificate of Resale and a copy of the declaration, bylaws and rules and regulations of the association. Until these documents are in the hands of the buyer — and for five days thereafter — the buyer can terminate the agreement for any or no reason.
The requirements of the Uniform Planned Community Act aren’t difficult to understand — but problems do arise. A common one involves the association that refuses to issue a certificate more than 30 days in advance of settlement. The delay gives the buyer a longer opportunity to terminate the agreement and, unlike a termination based on a contingency, the buyer doesn’t have to conduct an inspection or have any reason whatsoever for terminating.
As a listing agent, is there anything you can do to shorten a buyer’s opportunity to terminate the agreement? Yes. Order the Certificate of Resale in writing and remind the association of these statutory requirements:
1) The law provides that: “The Association, within ten (10) days after a request by a unit owner, shall furnish a certificate [of resale] and copies of documents necessary to enable the unit owner to comply with this section” (Section 5407(b)) and
2) The law also provides that the association may be subject to a suit for damages for failing to comply with the law, including a claim for punitive damages in the case of a willful violation (Section 5412).
Putting a seller’s request for the certificate in writing is always the best practice. I encourage listing agents to prepare a standard order form to assist the seller in obtaining promptly issued certificates.
To be fair to homeowners’ associations, there is a reasonable basis for delaying the issuance of the certificate. The Planned Community Act provides that a buyer is not liable to the association for unpaid assessments and fees that are greater than the amount stated in the certificate. For that reason, associations like to wait until the last minute to make sure they have captured every fee the owner owes.
It’s safe to say, however, that the association would not be liable for fees and assessments greater than the amount reported in their certificate as long as the report was accurate to the date issued. A prudent association would also include the dates when future fees are due and would also want to report whether any assessments are planned.
Buyers certainly have an interest in receiving accurate, up-to-date certificates of resale. After all, a buyer would not want to be stuck with an assessment or fee charged by the association after it issued its certificate but before the date of settlement. There is no reason why buyers, at their own expense and out of an abundance of caution, could not order a second certificate to be issued immediately before settlement.
A better understanding of the Uniform Planned Community Act and its provisions will help you better protect your sellers and buyers.
