Buying a home is a big deal. For the majority of us, it is by far the largest investment we make.  There’s a lot of paperwork involved, and it is not as simple to obtain up to date Association documents as one may think. The resale package is vital for the protection of the buyer, the seller, and the community in which the home is located. Along with the home inspection, the resale documents are a critical part of the lending process.

Pennsylvania state law requires a seller to provide the buyer with a resale disclosure package before execution of the sales contract, or otherwise before conveyance. This package includes the resale certificate, governing documents, and financial documents for the homeowners association.

The seller is responsible for providing those documents, including the costs to procure them. Many sellers believe the Association should fund those costs. It wouldn’t be fair for all owners to pay for resale certificates through their maintenance fees since the average annual turnover of homes In a community ranges from 10 – 20%.  Just as an association should not pay for Realtor commissions, real estate processing fees, etc. that pertain only to one home, so should it not be responsible for the preparation and Issuance of resale packages for an individual owner.

Comparing The Resale Certificate & Seller Disclosure

The Resale Certificate

The Resale Certificate protects the buyer from purchasing into a community association without first obtaining “full disclosure”.  The disclosure statement includes the legal or pending legal status of litigation involving the Association.  It also contains up-to-the-minute information about the assessments owed, outstanding special assessments and even pending assessments. The association’s financial status and any outstanding loans owed by the association are included. It also provides any covenants restrictions or violations on the unit.  All of these questions are answered and are entered in real time by a staff member when the order is placed.  The document is not static: it requires keen oversight as the questions are researched and completed.

Seller Disclosure

Seller disclosure helps protect the buyer from defects or problems within the home and property. The seller lists any known problems with the property on the disclosure form, giving the buyer advance notice of any repairs that may need to be made. In a planned community seller disclosure is much more inclusive. Depending on the incorporation date and type of laws your property falls underdetermines what you need.

Seller Disclosure Law 68 PA C.S.A. 7302(b) sets limitations in the case of condominiums or cooperatives. Any seller of a unit in a condominium created under Subpart B of Part II (relating to condominiums) or a similar provision of prior law or a cooperative as defined in section 4103 (relating to definitions) shall be obligated to make disclosures under this chapter only with respect to the seller’s own unit and shall not be obligated by this chapter to make any disclosure with respect to any common elements or common facilities of the condominium or cooperative. The provisions of section 3407 (relating to resales of units) shall control disclosures a seller is required to make concerning common elements in a condominium, and section 4409 (relating to resales of cooperative interests) shall control disclosures a seller is required to make concerning common elements in a cooperative.

Required Documents for Each Association Type

Below are the documents required in respect to which type of association under the law the unit falls under:

Read our post about the history of the Uniform Condo Act for an in-depth explanation.

Formed Pre-1963: Recorded Covenants, Bylaws if an association exists, budget if dues are paid; may fall under a Resale Certificate.
Formed 1963 to 1980: Declaration, Code of Regulations, Statement From Treasurer; in most cases a Resale Certificate is needed.
Formed 1980 or later: Declaration, Bylaws, Rules, and Regulations; a Resale Certificate is required and Reserve studies are also included.

Cooperatives, along with the resale package, also need Articles of Incorporation, Proprietary Lease, and Master Mortgage documentation.

As you can see, Resale Certificates are an important tool in closing negotiations and for the peace of mind of everyone involved in the transaction. Having an accurate resale package is vital to a smooth real estate transaction.

Rinaldo Acri states, “Resale Certificates mean that the seller’s obligations are taken care of, the buyer knows all about the community they are joining, and the association board knows there are no account delinquencies.”

Contact Acri Community Realty for more information about working with a professional property management company and how we can make dealing with resale packages and other financial items easier on your board. Acri Community Realty has solutions.

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