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

October 21, 2015 by Jon Griffith

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

A copy of the bylaws and the rules of the association.
A copy of the declaration of Covenants, Conditions and Restrictions (“CC&Rs”).
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.
A copy of the current operating budget of the association.
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.
A copy of the most recent reserve study of the association, if any.
Any other information required by law.
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.

New HOA Rules Change The Way a House is Sold

January 28, 2015 by admin

On February 2nd, there will be new procedures when it comes to selling a home that is located within a Home Owner’s Association (HOA.)

Download the new HOA Form Here

Until then, we will continue to use the standard HOA Addendum that is part of the purchase contract when the property being transferred is part of an HOA.

In the past, this document was typically completed and submitted by the buyer as a part of the contract, defining such things as who would pay specific fees related to the transfer of property. The problem with this is that without investigating the HOA, it’s difficult for a prospective buyer to determine how much those fees will be.

Consequently, buyers frequently submit their offer without knowledge of facts that would enable them to make an informed decision.

– Holly Esligner, ABR, CRB, CRS; Chair – 2014 HOA Workgroup; 2010 President of Arizona Association of REALTORS®.

Any buyer should know, before they submit the offer, what the true costs to join an association would be, whether there is one association, two, or in rare occasions, three governing associations on the subdivision (Grayhawk would be an example of this.)

The new form will change this. The revised HOA Addendum will now be generated by the Seller, just like the Seller Property Disclosure Statement. When someone offering a home for sale lists their home, it will be their responsibility to provide information about the governing agencies of the HOA as well as the costs associated with selling the home and include it with the listing on the MLS. The buyer will still be able to propose which parties will be responsible for the fees, but now they’ll know what the true costs are before making the offer.

As a result of these changes, buyers will be informed in advance which will help alleviate the problem of unexpected fees prior to closing which often kill the sale of the home and cause headaches for everyone.

If you’d like to know more, a Frequently Asked Questions page has been posted as well as a Best Practices page.

The Five Stages of Real Estate Grief

September 11, 2008 by admin

There are three factors that determine the sale of a home.

Location

Condition

Price

What good news! Why? You have nearly complete control over 66% of what sells a home. Granted, you cannot change the condition of the surrounding properties or the type of construction of your property. I mean, you could raze your house and rebuild a completely different style home, provided your HOA didn’t prevent it, but then you’d be throwing good money after bad as you created a home that didn’t fit the surroundings. The condition of the surrounding homes has mostly to do with location anyway, so you really do have control over most of the consumer response to your home.

There are five stages of grief that, if you are not in touch with reality, you will traverse throughout your experience selling a house. Why is this? Well, selling a home isn’t like selling off your possessions at a garage sale. Garage sales are usually designed to eliminate junk. Your home is a very personal space, and you’ve grown very attached to it, most likely.

My job is to provide you with the right information to help you make an informed decision about how you should price your home, and what you can do to improve its chances of selling.

In todays market, of the determining factors that you can control, price carries the most weight, and many sellers have fallen victim to “rear view mirror” thinking. Newsflash! The gig is up. We have to price our homes in line with what buyers are willing to pay. Remember that the value of a home is determined upon close of escrow. Asking more than it will sell for does not declare the new value on the block. The actual sale price of a neighboring like property combined with an appraisal is what is going to help you price your home properly.

Stage 1: Denial. Nobody is exempt from feeling this if their expectations are out of line. Not even real estate agents these days are pricing their properties realistically. If you enter the transaction with a realistic outlook on what your home can actually get in the marketplace, you’ll be able to avoid the denial that accompanies the let down after your property has chased the market.

Stage 2: Anger. Obviously if you’ve felt the loss of thousands of dollars (albeit on paper only, which makes the situation even crazier because you never had the money in the first place) then you’re going to experience all five phases. To what degree is determined by how quickly you can bounce back from fantasy land. You will be angry about waiting too long to sell. You’ll be angry when you realize that your Realtor was right when he/she recommended a much lower price bracket than you insisted upon. Get over it. It’s time to sell your home. Make the adjustments now and minimize your losses (remember, that didn’t even exist in the first place.) And, if you are actually experiencing more than just losses on paper, that’s all the more reason why you should price your home right, the first time.

Stage 3: Bargaining. Through your anger you’ll find yourself justifying why things are the way they are. You’ll begin to think things like, “If only I had.” “Maybe if we try this we can still salvage our…” Nope. You’re where you are now, just get it sold. Listen to your Realtor. He or she does this every day and sees people go through this process all the time. Trust us, we are here to help you move on with your lives.

Stage 4: Depression. This is where you’ll want to give up. Perhaps you might even consider taking your home off the market because you’ll find no point in selling. Most people can’t afford to hold two or more properties. Lots of people can’t even afford one property these days, especially after getting into the financial trouble that lenders allowed. You may even want to let your Realtor off the hook and find someone else to sell the home. Trust the Realtor you have. If he’s done his homework and is working hard for you, stick with it. We dread working our tails off to be a victim of the fourth stage of grief, which usually ends in you finding another Realtor who advises you to drop your price only to sell where your first Realtor had already suggested you price your home.

Stage 5: Acceptance. If you’re a healthy person, you’ll probably make it here quickly. In fact, if you’re a healthy person, you will probably avoid this entire process of grief through the idea of losing your yet unrealized equity gains in your home.

I can’t stress enough how important it is to price your home to sell. If you’re serious about selling your house, think about the cost in your lives of the process of selling. You may own two homes, you may have added utility bills through the process…you name it. The cost of pricing your home too high can last far longer than it’s worth. Your time is important. If you’re not actually serious about selling your house, then you probably shouldn’t list it at all.

Are you happy with your real estate situation? If not, please give me a call and I’ll help you move from point A to point B in as few steps as possible so you can go about the business of living and enjoying your life.