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Seller’s Obligations: Home Owner’s Association has Less than 50 Units

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The Arizona Association of Realtors Residential Purchase Contract is a legal document. When entering into any legally binding agreement, it is the party’s responsibility to read and understand each section of the contract, and know your obligations and how they affect the purchase or sale of a home.

If you are selling your home, and your home is within a homeowners association, you have additional contractual obligations to the buyer.  If your HOA contains less than 50 units, you have more work to do than if it had 50 or more.  You see, if there are 50 or more units, the Title company handling your escrow will ensure the HOA is notified of the contract and the HOA is required by law to provide the information below, which is a very important section of the HOA Addendum.

Line 36 of the H.O.A. Condomimium / Planned Community Addendum [download id=”56703″] clearly states that if your HOA has less than 50 units, no later than ten (10) days after Contract acceptance (a date that can be affected by various contingencies in the contract), the Seller shall provide in writing to the buyer the information described below as required by Arizona law.

So for example, if contract acceptance occurs on the 4th of a given month, the 5th would be day 1 and the end of the 10 day period would be 11:59PM on the 14th.  This creates a contingency for the buyer which gives them an “out” if they don’t like what they see.  They buyer has 5 days after you deliver the required information to them to make that decision.

As time is of the essence, it’s better to get this information to the buyer as quickly as possible once there is a signed contract. Every contingency that is met and lifted during escrow is one step closer to your success as a seller.

Information required to be provided to a Buyer by Arizona Law

  1. A copy of the bylaws and the rules of the association.
  2. A copy of the declaration of Covenants, Conditions and Restrictions (“CC&Rs”).
  3. A dated statement containing:
    1. (a)  The telephone number and address of a principal contact for the association, which may be an association manager, an association management company, an officer of the association or any other person designated by the board of directors.
    2. (b)  The amount of the common expense assessment and the unpaid common expense assessment, special assessment or other assessment, fee or charge currently due and payable from the Seller.
    3. (c)  Astatementastowhetheraportionoftheunitiscoveredbyinsurancemaintainedbytheassociation.
    4. (d)  The total amount of money held by the association as reserves.
    5. (e)  If the statement is being furnished by the association, a statement as to whether the records of the association reflect any alterations or improvements to the unit that violate the declaration. The association is not obligated to provide information regarding alterations or improvements that occurred more than six years before the proposed sale. Seller remains obligated to disclose alterations or improvements to the Premises that violate the declaration. The association may take action against the Buyer for violations apparent at the time of purchase that are not reflected in the association’s records.
    6. (f)  If the statement is being furnished by the Seller, a statement as to whether the Seller has any knowledge of any alterations or improvements to the unit that violate the declaration.
    7. (g)  A statement of case names and case numbers for pending litigation with respect to the Premises or the association, including the amount of any money claimed.
  4. A copy of the current operating budget of the association.
  5. A copy of the most recent annual financial report of the association. If the report is more than ten pages, the association may provide a summary of the report in lieu of the entire report.
  6. A copy of the most recent reserve study of the association, if any.
  7. Any other information required by law.
  8. A statement for Buyer acknowledgment and signature as required by Arizona law.

If this information is NOT provided by the required deadline, the seller will be in a sticky situation and will probably lose the deal, if not end up being sued by the buyer for specific performance.  Please consult with your real estate attorney for any legal matters that may arise.