Resale Certificates and Packages: Essential Information for Homebuyers

When purchasing a property within a managed community, it's essential to obtain a resale package, which contains a resale certificate and relevant governing documents. These packages provide crucial insights into the community and reveal if the current owner has met their financial duties to the homeowners' association (HOA). The documentation included in the package helps safeguard both buyers and sellers, reducing financial risks to the association. Understanding the components of a resale package, its importance, and how to acquire these documents is vital before buying or selling in a managed community.

What is a Resale Certificate?

A resale certificate, sometimes known as a closing statement, HOA resale certificate, estoppel, dues statement, paid assessment letter, 3407, or 5407, is the first component of a resale package. In different regions, this document might be referred to differently—for example, Georgia terms them as closing letters and Florida as estoppels, while Ontario uses the term status certificates. To simplify, we'll refer to it as a "resale certificate," but it's important to be familiar with the terminology used locally. Your property management company, real estate agent, or title company can provide guidance on the correct language.

This certificate offers detailed information about the home and its position within the community association. It lists overdue payments, any pending violations, unpaid fines, unpaid special assessments, and fees due at closing. Moreover, it details the association's status, including information about pending lawsuits, reserve fund amounts, and planned capital expenditures for the upcoming year. In some regions, additional information is included, such as the type of voting practiced by the association. For example, in Florida, the price paid for the certificate must be explicitly stated.

What Are Governing Documents?

The second part of the resale package includes the association's governing documents: the master deed, bylaws, articles of incorporation, and community rules and regulations. Sometimes, a plat map of the community is also provided. Certain states mandate the inclusion of board meeting minutes and a copy of the reserve study. Some associations require buyers to visit their office to review financials in person rather than distributing copies. Each state stipulates specific requirements for the package contents. While they share much of the same basic information, variations exist. For instance, in Virginia, details about restrictions on displaying the American flag and installing solar panels must be included. For any uncertainties, one can consult the state's condominium laws or seek advice from an attorney.

State regulations also set deadlines for how quickly a community must furnish the required information. Although these laws differ, a typical timeframe is between five to fifteen business days. A recent change in Florida law reduced the timeframe from fifteen to ten business days. While expedited processing might be an option, it often incurs additional fees and may not be feasible if the state mandates a physical inspection of the home. In such cases, patience becomes invaluable in navigating this process.