re-sale packets

Started by HeleneN • 13 replies • 1632 views

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HeleneN (Connecticut)
Posts: 84

Posted:

It recently came to the board's attention that a unit owner who has been living here for the past 3 years never received a re-sale packet at the closing. The packet contains Declaration, By-Laws, Rules & Regs, financial information, etc. This information surfaced when the the owner received a violation letter citing them for changing the color of their deck without board permission. The owner admits that ignorance is no excuse but is now accusing neighbors and the board of harrassment because since they moved in they have received other notices for other violations which they corrected immediately.
The PM confirmed that a re-sale packet was never issued because the seller never asked for one. I thought the excuse was rather lame but PM reminded us that she was not our PM at the time of the sale.

Can the Association be held responsible for not providing the necessary documents? What steps can we take to avoid this happening in the future? Any ideas would be appreciated.

Right now I'm in favor of MC providing the unit owner with the documents with a bill back to the unit owner. Unlikely they will pay it! They have 2 days left to return the deck to it's prior color and then it will be notice and hearing. I doubt the board will approve the color as it's located in a highly visible area and out of character with the cummunity.

At the same time another unit owner who has just moved in changed the color of their deck without permission. They do have the documents but never bothered to read them. They probably would have received permission if they asked as their deck is only visible to one other unit and the color not as dramatic. I know my last comment is rather subjective but it is what it is!

Words of wisdom would be appreciated.

LarryB13 (Arizona)
Posts: 4,099

Posted:

In most places the deed would indicate that the property is subject to restrictions and where those restrictions are recorded. Even if the seller does not furnish the documents to the buyer, the buyer nonetheless has notice that there are restrictions. Was this a sale-by-owner? The reason I ask is that if this sale went through normal channels (realtor and title company) one of the professionals involved should have noticed the deed restrictions and obtained a copy of them.

One thing to look at: if your state requires you to file a notice of how to contact to the association or management company, be certain that it is current. In AZ we are required to record such a notice and we have to update it when we change management companies. Before my association recorded such a notice we had a number of new owners (private sales and inheritances, mostly) who claimed ignorance of restrictions; since we recorded the notice we have had almost none.

This may vary from state to state, but I think in general that a buyer cannot evade the recorded deed restrictions because they were not furnished to him buy the seller.

HeleneN (Connecticut)
Posts: 84

Posted:

Thanks Larry

This was a sale by owner and I don't think a realtor was involved.

We are required to file with the town and secretary of state. We do this annually whether we change MC or not. Everyone wants the filing fee!

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By HeleneN on 08/08/2012 10:47 AM
It recently came to the board's attention that a unit owner who has been living here for the past 3 years never received a re-sale packet at the closing. The packet contains Declaration, By-Laws, Rules & Regs, financial information, etc. This information surfaced when the the owner received a violation letter citing them for changing the color of their deck without board permission. The owner admits that ignorance is no excuse but is now accusing neighbors and the board of harrassment because since they moved in they have received other notices for other violations which they corrected immediately.
The PM confirmed that a re-sale packet was never issued because the seller never asked for one. I thought the excuse was rather lame but PM reminded us that she was not our PM at the time of the sale.

Can the Association be held responsible for not providing the necessary documents? What steps can we take to avoid this happening in the future? Any ideas would be appreciated.

Right now I'm in favor of MC providing the unit owner with the documents with a bill back to the unit owner. Unlikely they will pay it! They have 2 days left to return the deck to it's prior color and then it will be notice and hearing. I doubt the board will approve the color as it's located in a highly visible area and out of character with the cummunity.

At the same time another unit owner who has just moved in changed the color of their deck without permission. They do have the documents but never bothered to read them. They probably would have received permission if they asked as their deck is only visible to one other unit and the color not as dramatic. I know my last comment is rather subjective but it is what it is!

Words of wisdom would be appreciated.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Helene,

The most recent Connecticut Common Interest Ownership Act (Chapter 828, July 2010) requires the seller to provide a re-sale packet (certificate) to every prospective buyer. It is not the HOA's responsibility. Generally, the management company (if there is one) will prepare the required packet at the homeowner's (seller's) request, usually for a fee.

"Sec. 47-270. Resales of units. (a) Except in the case of a sale in which delivery of a public offering statement is required under either this chapter or chapter 825, or unless exempt under subsection (b) of section 47-262, a unit owner shall furnish to a purchaser or such purchaser's attorney, before the earlier of conveyance or transfer of the right to possession of a unit, a copy of the declaration, other than any surveys and plans, the bylaws, the rules or regulations of the association, and a certificate containing: . . ." and then goes on to list the required contents of the certificate.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Helen,

Typically it's the responsibility of the seller to provide the packet to the buyer
It's the responsibility of the Association to provide that packet to the seller when requested.

It's the responsibility of the buyer, buyers realtor, closing company, etc. to know what documents the buyer should receive and when.

MikeS1
Posts: 521

Posted:

Tim nailed it again. The seller must ask for the HOA docs by making a request. In Virginia, all standard board contracts contain a clause that explains all this. Oddly enough, it seems that even when there are two real estate agents volved, we see many cases where the docs are never asked for. There is a 3 day contingency clause, so that once the docs are delivered to the purchaser, the purchaser has 3 days to review the docs (during which time they can kickout for any reason). Once the 3 days pass, there is not longer a contingency and the purchaser accepts the conditions and terms in the disclosure package. When a request is made for the HOA docs, the PM inspects the property and if there are any deficiencies or conditions, they are noted in the disclosure packet. Again, no one reads their docs. If the items are not corrected before settlement, the purchaser has accepted the terms and conditions (agreeing to corect the items noted on the inspection). Now the purchaser must correct the deficiencies. Once the P.M. moves forward and asks them to correct the problems, we get the "I didn't know speech" from the new owner. It really gets old.

We urge our homeowners talk to their Realtor about ordering their docs early (as soon as they list the home), so that you're not surprised by the P.M.'s request to correct deficiencies or unapproved alterations and you may be able to correct these items before you get a contract. Also, the sooner that you give the docs to your buyer, the sooner the 3 day contingency goes away, so you might not see "buyer's remorse" or spook the buyer by having items on the inspection report that must be corrected.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Again it is the BUYER's responsibilty to be informed. The CC&R's are considered PUBLIC documents and available at the records department of the local courthouse. The incorporation docs are at the STATE level. By laws of the HOA are INTERNAL documents and may or may NOT be filed with the CC&R's.

The financials of the HOA are privileged information ONLY for the owner/member. A purchaser is NOT a member until they own the home/property. It is optional for an HOa to allow buyers to see their financials or meeting notes...etc...

I made a small brochure for interested parties. It covered thing like what the HOA dues were and covered. It let people know some rules and be a welcoming type document. In it would include where to find the CC&R's. It was very helpful without being revealing or responsible.

Former HOA President

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By MelissaP1 on 08/09/2012 2:24 PM
Again it is the BUYER's responsibilty to be informed.

Unless state law says otherwise. As I pointed out earlier, here in Connecticut (which is where the OP lives) state law requires the SELLER to provide the prospective buyer with specific documentation relating to the HOA before any sale is consummated and gives the prospective buyer a period of time to opt out of the deal without penalty. Since the Connecticut law is based on the UCIOA, there are at least a handful of other states with the same requirement.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

The old arguement. Owner moves in, does something, The BOD comes after owner. Owner says well I did not know. No one told me. See you in court. Arrogant BOD response well that was your fault, not ours.

Great way to start a relationship.

In the long run it is always easier to provide a buyer with or let them know where to obtain all the information even if one does not have to provide them anything.

In my declarant controlled HOA when buying a new home, one signs a 30 day Lot Reservation Form. No money down just a reservation. During this 30 days one chooses their house style, options, and negotiates the final price. They then got a a Purchase and Sale Agreement. Also when one signs the Lot Reservation they sign for and are given a copy of the Covenants, Bylaws, Rules and Regulations for their review.

All of our docs are filed with and attached to the deed but as many have said they often gets lost in the sales shuffle.

When we owners takes over the HOA (within about 6 months), I would like to find a way of continuing this openness.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Basically, just because you dont know about the CCR/Bylaws, doesnt mean you do not have to follow them.

When you move to a new state, the state does not provide you with all of its state specific laws, but you still have to follow them. Saying "i didnt know" will not excuse you from a fine.

Same goes for HOA's. Although I agree, the HOA needs to send CCR/Bylaws to anyone they suspect as a new resident. Simply photo copying it or mailing them a simple 32 cent post card with a web address to the ccr/bylaws, hoa dues and where to send the check would be good practice.

HeleneN (Connecticut)
Posts: 84

Posted:

Thanks for all your comments. I did my homework and Bruce is correct, the seller is responsible for providing the buyer with a resale packet according to Ct CIOA. We have some vital information in our Declaration concerning Unit Owner Insurance Policies. I wanted to be sure that the Assoc. could not be held responsible in the event a home owner incurred a loss because they didn't have the proper coverage.
It is not the intent of the board to be arrogant in any of these matters but we don't always know if a unit owner has received the necessary documents. Some buyers believe they can save money if they don't use a realtor or lawyer and if it's a cash sale there won't even be a bank involved.
In any known situation the board will advise the unit owner of how they may obtain the documents.
Many thanks for your comments.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I don't know how you buy a house without a lawyer involved. You don't need a realtor but a lawyer would be needed in most cases to do the paperwork/lien searches/recording. So I don't know where you get that assumption. Cash sales are bad ideas and one should never buy a house with straight cash. Plus if they did, you mentioned the seller id responsible for providing the information.

I mention this stuff because one must recognize realty and not assumptions. The realty is homes exchange hands and their is a buyer and a seller. The seller provides the documents. It does not matter to the HOA how that transaction was done. It's irrelevant. The buyer is now a HOA member. The seller is gone...

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By HeleneN on 08/10/2012 6:10 PM
We have some vital information in our Declaration concerning Unit Owner Insurance Policies. I wanted to be sure that the Assoc. could not be held responsible in the event a home owner incurred a loss because they didn't have the proper coverage.

Why not put together a welcome letter which can mention that if the buyer did not get a copy of the documents from the seller that they are available. Include things like trash days, common rules and assessments. You can also mention what the Association insurance covers.

Tim

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