With recent reports of a slight increase in pending home sales and mortgage applications in the Washington Metro area, communities can expect to see a corresponding slight increase in resale packages orders. While buyers are required to receive resale packages prior to settlement, few understand the importance of reading all of the material and gaining a strong understanding of the financial reports, audits and governing documents.
Simply put, the resale package is a document prepared by the management company that dictates the financial health of a community and the rules a resident must live by.
The resale package (both certificate for resale and association disclosure packet) must contain the following information:
*The name of the association and the name and address of its registered agent in Virginia, if the association is incorporated.
*Information pertaining to expenditure of funds which requires an assessment in addition to the regular assessment during the current or next fiscal year.
*The amount of assessments and other mandatory charges imposed by the association for the property being purchased, and the status of the seller’s account.
*Information regarding any other entity of facility to which the owner may be liable for fees or other charges once he or she purchases the lot.
*Association financial information, including the current budget, most recent financial statement, and status of reserve funds.
*A description of pending suits or unpaid judgments of a material nature.
*Insurance information, both association and individual owner coverage requirements.
*Information concerning compliance by the seller with the governing documents, including copies of any notices provided to the seller.
*A copy of the current governing documents, and any rules and regulations or architectural guidelines adoptee by the association. Failure to receive copies of these documents does not relieve the purchaser of the obligation to comply with their provisions.
*Certification that the association has registered with the Virginia Real Estate Board.
The certificate for resale for a unit in a condominium association must contain all of the above information, plus:
*Whether the documents create a right of first refusal.
*Whether the condominium is located within a development subject to the Property Owners’ Association Act.
*Information concerning any limitation on the number of persons who may occupy a unit.
*The association disclosure packet to a townhome or home in a property owners’ association must also contain:
*A copy of the cover sheet developed by the Virginia Real Estate Board.
*Information concerning use restrictions, specially related to “for sale” signs and flag display.
Important Questions and Answers
Are the seller’s financial obligations current?
Taking title to a unit with unpaid assessments, fines or other charges may subject the purchaser to liability for paying those outstanding amounts. The purchaser will want to be aware of any fees prior to settlement for payment purposes.
Are the Capital Reserve accounts fully funded?
Reserve funds are collected to replace capital assets (i.e. streets, sidewalks, roofs, etc.) when they reach the end of their useful life. Every five years a reserve study is conducted and measures the life span and anticipated cost of these repairs. The funding for the repairs is acquired by regular payments into a capital reserve account. Inadequate funding can result in special assessments- charges that must be paid in addition to the regular assessment.
What does the Association’s master insurance policy cover?
Who pays the deductible, the unit owner or the Association? Is your personal property, (i.e. furniture, wardrobe, etc.) covered? Have there been many claims in the past? How high is the association’s deductible- meaning what will you have to cover before the insurance kicks in. Ask your insurance agent to evaluate the insurance section of the condominium instruments to determine what coverage you need in addition to that covered by the master policy.
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