While purchasing a home is rewarding and exciting, the procedure can be lengthy—especially if the property is in a community with a homeowners’ association (HOA). The HOA buying process requires additional steps and extra paperwork that must be reviewed, including an HOA resale package. Read on to learn about HOA resale packages, the HOA resale cycle, and more.

What’s an HOA Resale Package?

An HOA resale package is a collection of documents that buyers receive when purchasing a condominium or home in a neighborhood with an HOA. Resale documents ensure the security of the HOA, buyer, and seller. They show proof of the seller’s current standing with the HOA and offer transparency to buyers regarding open balances, violations, and fees that could become their responsibility. These documents also protect the HOA from financial risk and conflict.

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What’s in an HOA Resale Package?

Often required to be distributed by law, the HOA resale package typically contains the resale certificate and governing documents. The following forms may also be included in an HOA resale package:

• Annual financials
• Insurance certificate
• HOA meeting minutes
• Reserve report
• Litigation disclosures
• Resolutions and policies    

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HOA Resale Certificate  

The HOA resale package should include the resale certificate, also known as the closing statement, estoppel, dues statement, paid assessment letter, or form 3407 or 5407. The resale certificate is a financial overview of the HOA, featuring a seller’s current standing with the association and key information regarding the property being sold. Other information may include:

• Amount and frequency of HOA dues
• Unpaid violations
• Pending violations
• Past-due fees
• Open fees that are due upon closing
• Planned association expenditures
• State-specific information  

The resale certificate provides security and protection to all parties and limits the HOA’s financial risk. For example, if a seller is delinquent on payments, a resale certificate can serve as a source of documentation to inform the buyer that they may become responsible for paying off the seller's dues. The resale certificate also reduces the HOA’s liability for unpaid dues accumulated by the seller.

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HOA Governing Documents

The governing documents should be found in the HOA resale package. Outlining association, board, and resident operations, authority, and obligations, governing documents may include:

• A master deed and bylaws
• Articles of incorporation
• Community plat or plan
• Rules and regulations
• Board meeting minutes

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How Does the HOA Resale Process Work?

Although the HOA resale process varies by community and state, it usually looks like this:

1. After a purchase contract has been signed, the seller must provide the buyer with a resale package.
   
2. The buyer, seller, title company, or real estate agents will request the package from the HOA board or management company 30 to 60 days before closing.
   
3. Designated parties will pay the appropriate service fees, and the package is distributed.
   
4. The buyer reviews the documents within a specified timeframe. If the terms are accepted, the closing course continues. Any concerns, rejections, or questions must be communicated immediately, as they could cause delays.

The timeline will be dictated by governing documents and state laws. Please refer to these items for more information and consult a legal professional if needed.

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How Long Does the HOA Resale Process Take?  

Depending on the state, the standard HOA resale process can take roughly five to 14 calendar days. Some states may even require a specific number of days for the package to be completed and distributed.

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Who Manages the HOA Resale Package?

If your association partners with a professional community management company, they’ll support the HOA during the completion stage of finalizing a resale package and certificate. While there may be additional organizational fees, the property management company works as a protective shield for the HOA, regulating and monitoring the procedure for any errors or inaccurate information. If errors or inaccuracies occur, the management company is often held responsible and may be obligated to pay the community the amount not collected at closing. They may also be obligated to inform the homeowner that an error was made on their behalf.  

If your association doesn’t partner with a professional community management company, the HOA board provides the resale package. In most cases, a community will have a designated person to handle documents related to the resale package. In the event that an HOA board member has to complete the certificate, the association and those involved with the certificate’s completion assume significant liability for any errors or inaccuracies.

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HOA Resale Process Tips for Buyers

All HOA buyers should adhere to these best practices during the HOA resale process:

1. Read everything. Carefully read all documents and confirm you understand their contents. Reach out to your real estate agent with questions or concerns.
2. Do your financial due diligence. Take the time necessary to check for any special assessments, community due increases, unpaid violations, and the financial status of the home and HOA.  
3. Review the rules. Thoroughly review the community’s bylaws and confirm you can adhere to them.
4. Be prepared to negotiate. Always be ready to negotiate outstanding costs. A buyer may be able to negotiate money back during the home's closing to pay off outstanding debts. Be aware that if a home closes with outstanding fees or unpaid dues, the buyer is responsible for paying off those debts.

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Manage HOA Resale Documents With TownSq

Living in a community association comes with countless benefits, but the HOA selling process can be complicated. However, TownSq, the leading digital platform for HOA board members, residents, community managers, and management companies, makes moving in and out of an HOA easier than ever. Our top-tier communication, document storage, and engagement features promote streamlined connection and collaboration. To explore everything TownSq offers, request a 30-day free trial here!

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