1. What is a resale certificate?
The first part is the actual resale certificate, which may also be called a closing statement, estoppel, dues statement, paid assessment letter, 3407 or 5407. In Georgia, these statements are known as closing letters. Florida calls them estoppels. In Ontario, they are status certificates. For simplicity, this article will use the term “resale certificate,” but it’s important to make sure you know the language used in your area. The association’s property management company, realtor and title company will be well-versed in the terminology you need to know.
The resale certificate provides specific information about the home you are buying and its standing in the community association. It includes any past due payments to the association, pending violations, unpaid violations, unpaid special assessments and fees that are due upon closing. It also includes information about the association as a whole: pending litigation, amounts in the reserve fund and planned capital expenditures for the upcoming year. Some states also include the type of voting that the association uses and other state-specific information. In Florida, the amount that is paid for the certificate must be included on it.
2. What are governing documents?
The second part is the association’s governing documents: The master deed, bylaws, articles of incorporation and rules and regulations. If one is available, a plat map of the community may be included. Some states also require board meeting minutes and a copy of the reserve study. A very small number of associations don’t distribute copies of their financials. They require buyers to come in person and review the financials in the office. Each state will have specifics about what the package must include. Although they include most of the same basic information, there are variations. Virginia, for example, requires that the package include information about any restrictions on displaying the American flag and on solar panels. If you have any questions, look to your state’s condominium laws for clarification, or contact an attorney.
State laws will also dictate how long a community has to complete the information required. Although the laws vary, five to 15 business days is a likely range of time. A new Florida law reduces the time from 15 days to 10 business days. Sometimes rushes are possible, but not if the state requires a physical inspection of the home being purchased. Certificates needed in a hurry often come with additional fees, so patience can be a virtue in this process.