Why Maryland HOA Resale Packages Matter
If you’ve ever bought or sold a home of any kind, you may be familiar about what an HOA resale package is. HOA resale packages tell the buyer and seller important information about both the individual unit being purchased and about the financial standing of the association. As a seller, your resale package is providing the buyer with an important level of transparency about your home’s financial standing in the association.
What is an HOA Resale Package?
A resale package contains vital information to those purchasing a home in an association. Resale certificates reduce the liability for the HOA if the seller isn’t up to date on payments, thus ensuring that it’s the buyers’ responsibility, after a certain time period has passed, to pay the HOA. Resale certificates are legally required documents ensuring that buyers have full disclosure before purchasing a property.
In this article, we will explain why the homeowner pays for a resale package and why it’s part of the standard homebuying process. We’ll also discuss what to look for when purchasing a home from someone in an existing HOA.
What Does Maryland Law Say About HOA Resale Packages?The Maryland Condominium Act sets all the regulations around condominiums and community associations. In Maryland, a resale package includes a copy of the declaration, the bylaws, the rules and regulations of the condominium and a statement from the owner as to whether or not the property violates any health or building codes or any bylaws of the association.
The documents must also include a certificate that details the monthly assessments, any fees that are past due, a statement of a planned capital expenditure if it isn’t included in the current operating budget, association balance sheet and income expense statement, any pending litigation or judgments against the association, a general description of the association’s insurance policies, a description of common amenities and more. These documents have to be provided to the buyer at least 15 days before closing.
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Although it is in your best interest to become familiar with all documents included in the HOA resale package, here are 4 key things to look for when purchasing a home from someone in an HOA:
- Make sure that the seller is currently up to date on all fees, special assessments, and violation fines. If there are any amounts outstanding, be prepared to negotiate to get some money back in closing costs to pay the debts; otherwise, you will be responsible to pay them out of your own pocket!
- Read over the bylaws to be sure that you are not agreeing to abide by any rules that you cannot actually abide by (for example, pet issues, number of cars, ability to list as a short-term rental, etc.)
- Check the reserve study and YTD financial statement. This will tell you if there could be special assessments in the near future, or perhaps an increase in monthly/quarterly dues.
- See if the association currently has any pending litigation, whether as the defendant or the plaintiff.
As mentioned above, the homeowner has to get a resale package in order to protect both the buyer and the seller, and at the same time minimize the financial risk for the association.
At what point in the purchase process does the resale package come into play?Generally speaking, the resale package is ordered by either the buyer or seller after the purchase contract is signed. In Maryland, the state requires that the seller provide the buyer with this information. You, as the seller, will have much of the information on hand already, such as governing documents, rules and regulations and bylaws. You can share that with the buyer ahead of the contract being signed, if you feel comfortable doing so. But, you are still legally obligated to order the complete and current resale package.
How Can We Help You?FirstService Residential is Maryland’s leader in expert property management. For the last 25 years, we have made sure that everyone living in one of our communities has had access to the services they expect with the customer care they deserve. Our friendly, professional associates are here for you, from Charm City to Annapolis and everywhere in between.
Our Maryland property managers work to enhance your property values by conducting regular inspections to spot and fix problems and making sure that rules are enforced fairly and firmly. We improve resident lifestyles with top-of-the-line amenity management and communication to keep you up to date on community news and events. Financial management is a breeze because we do it for you, from budget planning to tax preparation assistance. At FirstService Residential, we’re your community partners, taking care of the details so that you can keep your eyes on the big picture and enjoy your community.
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