Resale packages are part of a home purchase if that home is located in a managed community, whether that is a condominium, single-family home homeowner association, townhome community or any other managed community. The package, especially the resale certificate included in it, provides both the seller and the buyer critical financial information about the individual unit being purchased and about the association. It can impact your association in a couple of different ways as well, especially if your association is self-managed.
What does the law in Virginia say about resale packages?
The Virginia Condominium Act
defines all of the laws related to community associations in that state. They require that the seller provide the resale package to the buyer or the buyer’s agent within 14 calendar days of requesting it.
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, pending violations against the unit, a general description of the association’s insurance policies, a description of common amenities, occupancy limits, limitations on solar panels, rules for displaying the American flag and more. These documents have to be provided to the buyer at least 15 days before closing.
The Condominium Act allows the purchaser to cancel their contract for any reason within three days after they’ve received the resale certificate, or if they are told one isn’t available.
How do self-managed communities handle resale packages?
They actually have whoever is in the office create these packages, whether that’s a board member or a clerical staffer or the community manager they’ve hired. The drawback to that is that the liability for mistakes or inaccuracies in the information is on the person providing the documents. If a professional property management company, which usually creates these certificates simply because they handle the accounts receivable and financials, makes a mistake, it is on the management to pay the community association the amount that was not collected at closing because of the mistake. The homeowner has to be notified of the error and informed about the correct amounts to pay, for example. Having a professional property management company handle resale packages and other mortgage-related paperwork takes all of that liability off the association and makes sure the association is paid all that it is owed. In Virginia, failure to provide a certificate or bad information on it can cause a sale to be canceled, negatively impacting the association’s finances and, eventually, property values.
To learn more about resale packages and certificates, and their impact on buyers, sellers and community association boards, check out our interview with resale expert Marlayna Bohrman.
For further information on how a community association management company can help your community, fill out the form below.