Title Tip: What is an HOA Resale Certificate And Why Do I Need One?

Resale Certificates are often a frustration when buying or selling a property with a Home Owners or Property Owners Association. They are required when selling a property that has mandatory dues or assessments paid to an HOA.

What is a Resale Certificate?

A resale certificate is actually a set of documents prepared by the HOA or the HOA’s management company. They contain disclosures and detailed information about the property and the HOA community.

While associations have their own sets of rules, some requirements are alike for all Texas transactions with mandatory associations. In Texas, the seller must provide a resale certificate to the buyer by the deadline stated in the purchase contract.

The Texas Real Estate Commission provides a standardized resale certificate form for both single-family homes and condominiums.

The Cost

The cost for obtaining a resale certificate in Texas is capped at $375. Since it is the seller’s responsibility to provide it, the seller typically pays this expense at the time it is ordered.

HOA management companies usually expect payment upfront before they will process an order. By Texas law, they have 10 business days (usually 14 calendar days) to deliver the resale certificate and documents once the order is placed and payment is received.

There is no restriction on rush or demand fees. If the requested information is due before 10 business days, the additional expedited or demand fees range can range from $100 to $350 on up. To avoid rush fees, allow adequate time in the contract for these documents to be delivered.

The HOA may also charge transfer fees, processing fees, account closure fees, or fees for items like common area keys. These are disclosed in the resale package.

Essential Elements

When a property is part of a mandatory association, the owners must pay dues to maintain amenities, shared areas, and perhaps other services. An HOA resale certificate discloses the amount and frequency of dues and assessments. It includes a financial outline of the HOA, including the budget, reserves, and previously approved future special assessments or dues increases.

The rules and regulations of the association are made known in the governing documents. Restrictions and rules that owners are expected to follow are spelled out. These can often include details about landscaping, pets and animals, sign and flags, holiday decorations, parking, noise levels, rental restrictions, and more. Architectural requirements and aesthetic rules such as front door color, fence design, roof materials, etc. are specified in these documents.

Association voting procedures, board member elections, etc. are explained. The common areas, maintenance, and repairs that the association is responsible for are detailed as well as the owner maintenance requirements. The HOA Resale Certificate also discloses any lawsuits they are involved with and other information.

Specific information about the property being sold is included in the resale package. This gives the buyer notice of any violation of the HOA rules prior to closing. This will also reveal if the current owner is behind on any dues.

Acceptance of The HOA Documents

Once the resale package is disclosed, silence is considered consent. It is the buyer’s right and responsibility to review the HOA rules, restrictions, requirements, and resale certificate to ensure they are comfortable with the association’s mandates.

As stated in the contract, after receiving the HOA documents and resale certificate, the buyer has a specified number of days to terminate the contract if they don’t like what the resale certificate or other documents reveal.
The buyer’s mortgage lender will want to review the HOA information for details such as owner-occupancy rates, lawsuits, and the HOA’s financial health. If a property doesn’t meet the lender’s criteria, they may refuse to issue a loan.

The purpose of the resale certificate is to provide transparency and protection to all parties. It ensures the buyer is informed about the community they are joining, their obligations to the HOA, and the rules they are agreeing to follow.