Understanding HOA Documents
The homeowners association’s (HOA) common interest community (CIC) governing documents contain the rules, regulations, and all other contractual terms by which homeowners in that community are bound.
If a property is part of an association, the buyer becomes part of the association upon purchasing that property. Per the contract, the seller is obligated to provide the Association Documents to the buyer.
HOA documents need to be disclosed because the new homeowners need to know the HOA’s rules and restrictions; when, where, and how to pay their HOA dues; and any legal concerns related to the HOA.
Below is an overview of what these documents mean and how they can be obtained.
HOA Status Letter
Once a contract is received by the title company (and the home for sale is part of an HOA), the title company will order an HOA status letter. It gives the title company a written status of how much the dues are for the property, when they are charged, current standing of payment, and the balance of any outstanding amounts the title company needs to collect at closing. This letter may contain a transfer fee (sometimes called a record change fee), a status letter fee, or both.
In many cases, HOA management companies require a fee to compile and send the necessary documents.
CIC Documents
The CIC documents should be ordered as soon as possible after the contract is executed, in order to meet the deadline specified in the contract. They provide the buyer with the financial status of the HOA, meeting minutes, declarations, by-laws, rules and regulations, etc., from the homeowner’s association. Some associations will provide these free of charge to the Seller directly; while other HOAs will charge for them.
The CIC/Association Documents also include the Covenants, Conditions and Restrictions (CCP&Rs) which are disclosed on the Exceptions page of the title commitment. The title company often includes a copy of the CC&Rs with the title commitment, either as a link on the electronic version of the commitment, or as a paper copy sent out with the first commitment.
If you have any questions about homeowners associations, or the documents involved in the purchase or sale of a home that is a part of a homeowners association, please feel free to reach out to me. I would be happy to be a resource for you!
Information sourced from www.LTGC.com.
