Essential HOA Documents for Sellers to Provide Buyers on Resale in California

CA home selling

Some CA home sellers don’t understand their disclosure obligation to provide copies of homeowner association (HOA) documents to buyers. 

SELLER DISCLOSURE OBLIGATIONS

This lack of understanding by sellers can sometimes lead to seller disclosure challenges before buyers clear contingencies and complete the purchase.

When we serve as REALTORS® for home sellers, we make sure that these HOA disclosures/documents are provided to the buyers:

1.  Declaration of Restrictions (known as the “CC&Rs”).

2.  Articles of Incorporation – or Articles of Association

CA HOMEOWNER ASSOCIATIONS3.  Bylaws

4.  Any other document which establishes or defines the common, mutual, and reciprocal rights and responsibilities of the owners or lessees. 

5.  Current Financial Information and related statements (if available or applicable), such as: An Operating Budget, Financial Documents, Association Statements, Summary Reserve Funding Plans to include the following information:

  • Estimated revenue and expenses on an accrual basis,
  • Association reserves (based on assets held in cash or cash equivalents),
  • Estimated remaining life of major components,
  • Estimated useful life of major components,
  • Estimated replacement cost of each major component,
  • Estimated reserves necessary to repair, replace, restore, or maintain major components,
  • Actual reserves set aside to repair, replace, restore, or maintain major components,
  • Amount of funds, if applicable, received from a compensatory damage award or settlement arising out of any construction or design defects,
  • Percentage ratio of actual to estimated reserves,
  • Current deficiency in reserve funding expressed on a per unit basis,
  • Statement of anticipated assessments to repair, replace, restore, or maintain major components,
  • Whether the board of directors has determined to defer or not undertake repairs or replacement of any major component with remaining life of 30 years or less,
  • Whether the association has any outstanding loans with an original term of more than one year(including the terms),
  • Statement of procedures used to calculate reserves for future purposes,
  • Statement regarding assessments and foreclosure (given within 60-day period prior to beginning of fiscal year).  Statutory form for the “Assessment and Reserve Funding Disclosure Summary” can be found in California Civil Code Section 1365.2.5.

6.  Regular, Special Assessments and Fees. 

7.  Outstanding Delinquent Assessments, Monetary Fines or Penalties – Include any late charges, interest and costs of collection. 

8.  A statement describing the association’s policies and practices in enforcing lien rights or other legal remedies for default in payment of its assessments.

9.  Summary of the association’s property, general liability, earthquake, flood, and fidelity insurance policies.

10.  If there is a provision in the governing documents that prohibits the rental or leasing of any separate interests in the common interest development to a renter, lessee, or a tenant, a statement describing the prohibition and its applicability.

And upon request by the prospective buyers, they must also be provided with:

A.  Copy of HOA minutes of the meetings, excluding meetings held in executive session, of the association’s board of directors, conducted over the previous 12 months, that were approved by the association’s board of directors.

B.  HOA cover sheet itemizing:  (1) the HOA sales disclosures required by law;  (2) the HOA disclosures provided by the HOA; and  (3) the estimated fee for providing the required HOA disclosures distinguished from other fees, fines, or assessments.      

When we serve as REALTORS® for home buyers, we make sure that the HOA disclosures/documents are provided to our clients. 

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CONTACT US HERE for information about listing and selling homes at common interest developments (CIDs) in Orange County CA.

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Source of this information is California Association of REALTORs®and this is for information only and is not the providing of legal services. 

Contact us about listing and sale at Orange County CA homes and real estate. ~ Professional REALTOR® agent representationand help for property owners, private trust estate representatives, estate administrators, executors and heirs, probate and trust attorneys, estate planners, income tax professionals, public guardians, fiduciaries, investor group managers, bankers, and individuals, with listing and sale of properties at Orange County, CA.

Posted via email from Explore OC Homes

About Harrison K. Long

Businessman, Professional real estate representative, Realtor, GRI, Broker associate, Coldwell Banker Residential Brokerage - Orange County, California - CA DRE 01410855 - Helping property owners, estate trustees, executors and administrators, fiduciaries, bankers, investor group managers, with listing and sale of properties - helping people with their best decisions about homes and real estate - Orange County Association of REALTORs member, California Association of Realtors member now serving on its board of directors from 2011 to the present, National Association of Realtors member - Attorney member of the California State Bar Association #69137 - Contact by telephone or text at 949-701-2515.
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