3407 Resale Certification

IoanaS (Pennsylvania)
Posts: 15

Posted:

Hi,
I purchased a condominium in PA 7 months ago; the 3407 resale certification specifies that the Condominium is NOT a master Association or part of a master Association and does NOT allow the Association to become a master. Also it does specify xxx amount for monthly dues and xxx amount for one time capital contribution - which they have been paid (capital contribution at the date of settlement and the HOA dues monthly). 7 months later to find out ( email from one of the board directors) that the condominium is also part of the Proprietary Association and there should have been another capital contribution worth with one year of the proprietary association fees and as well I have to pay retroactively these fees since I moved in. Besides the fact that this came as a shock to me as I had no clue of such I do not feel I am responsible since I have not agreed nor signed any document to be part of two associations. To me it seems what has gone wrong was the 3407 resale certification that was provided by the company who manages the estate. Not to mention the way they realized that such fees were not collected was thru me- I have gotten a letter on the mail that the proprietary association fees are going up from x amount to y. I honestly thought that was a clerical error, a week prior I have received the letter about the condos fee being increased as of Jan 1st. However to have peace of mind I called the Management Company and questioned this. That's when pretty much everything started and emails from the board coming over chasing me for money.
Title 68 Real Estate Property specifies " c) Liability for error or inaction by association - a purchaser is not liable for any unpaid assessment or fee greater than the amount set forth in the certification prepared by association"
On the other hand - do I have a void contract?
Any advise?
Regards,
Ioana

TimB4 (Tennessee)
Posts: 21,059

Posted:

Ioana,

You are asking questions that would be better answered by an attorney or, perhaps, your realtor or title company.

That said, there are some individuals on this site from PA who may have knowledge in this area. Just keep in mind that we are not attorneys and can only offer opinions based on information contained in your posting, personal experiences, any research we may have done and responses to any questions asked. If any of those change, the opinions may change. Additionally, we don't have access to the documentation you (or a local attorney) have access to. Details in that documentation can make any opinions or advice invalid.

IoanaS (Pennsylvania)
Posts: 15

Posted:

Hi Tim... Thanks... I do understand and agree with what you said... I will be taking this with an attorney and sick legal advise. I just wondered if anyone else has been in such situation as mine. My realtor and title company has not done anything wrong- the resale certificate it's black and white and as I mentioned previously does not mention about any other association.

TimB4 (Tennessee)
Posts: 21,059

Posted:

The title company should have, in my opinion, identified that the deed was incumbered by the two associations when they did the title search.

TimB4 (Tennessee)
Posts: 21,059

Posted:

The Realtor (either the buyers or the listing) should have informed you of the two associations.

However, I'm not sure what the disclosure laws are in PA. There may or may not be a time frame in which you would have any recourse against the buyer/Realtor/Title Company/Condo Association for failing to disclose the master Association.

More than likely, you will be responsible for assessments from the date of purchase forward regardless if they were disclosed to you or not. The issue will be what recourse would you have to recover damages for lack of disclosure of those assessments and who would you recover them from. As I said earlier, a question for an attorney. Perhaps one versed in property/contract law.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Here are some links that may be useful to you:

68 Pa.C.S. §§7301-7314SELLER DISCLOSURES

PA Title 68 - Real Property

Failure to Disclose: Responsibilities Under the Real Estate Seller Disclosure Law a 2013 article.

IoanaS (Pennsylvania)
Posts: 15

Posted:

Hi Tim-
Really appreciate your opinions/input.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

I have received the letter about the condos fee being increased as of Jan 1st.

This part can not be fought. Dues go up, it happens.

But you might have a case against getting money from the seller for the 1 years worth of dues owed, or a partial reimbursement. Personally, I would have it all figured out, then decide if I need a lawyer. Next ask the seller for reimbursement of the 1 year fee. If they refuse, bring it to small claims court.

IoanaS (Pennsylvania)
Posts: 15

Posted:

Steve- not the condo fees going up is my issue but the fact that I was not informed or disclosed there is another association the condo belongs to. I have not been paying the proprietary association fees as I wasn't aware. But the condo fees I have.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Hi Iona

68 cs 3407 is part of a PA statute that our legislature enacted to prevent what happened to you. You can find the 3407 wording at that section of the link that Tim provided.

If the 3407 said there was no master association, and no attempt was made to correct a clerical error before the closing on your house, then you cannot be forced to pay.

If I was in your shoes, I would send a registered letter to the HOA telling them that they intentionally misled you by putting false information in the 3407, that you have no obligation to pay a fee that the HOA did not properly disclosed in the 3407, and that they should correct their 3407s in the future so that they don't wind up with other HOs who have no legal obligation to pay these undisclosed fees.

You should be protected against retroactive and current fees, but I do not know how the law would apply to future year fees. You should consult a lawyer on that.

Just my opinion tho.

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By IoanaS on 01/24/2015 7:34 AM
do I have a void contract?

IMO, no. An uncollectable fee does not void the contract.

Sikubali jukumu. Read all posts at your own risk.

IoanaS (Pennsylvania)
Posts: 15

Posted:

Not the un collectable fees make a void contract but I do not have a resale certification that specifies I belong into another association. The resale certification I have is incorrect. Am I suppose to have two certificates? Don't know...

IoanaS (Pennsylvania)
Posts: 15

Posted:

Thank you for your opinion here. weirdest thing is that they have made the mistake and they are the ones to chase me for payments now- retroactively since I moved. Don't understand how come they haven't realized that they were only collecting from me for condo fees but not for proprietary.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By IoanaS on 01/24/2015 11:14 AM
Not the un collectable fees make a void contract but I do not have a resale certification that specifies I belong into another association. The resale certification I have is incorrect. Am I suppose to have two certificates? Don't know...

Please clarify.
Are you saying that one of the documents you received in the resale package said that there was a master association but the 3407 failed to disclose it?
Or are you saying that there was no reference to the master association in any of the resale package docs?

Sikubali jukumu. Read all posts at your own risk.

IoanaS (Pennsylvania)
Posts: 15

Posted:

No reference that there is a master association or any other association.
Quote from 3407 resale certification: " # 15 The association is not a master association or part of master association. The Declaration of the association does not allow the association to become a master association or to become part of a master association "
No other resale certification was given to me but the 3407 referred above .

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By IoanaS on 01/24/2015 11:14 AM
The resale certification I have is incorrect. Am I suppose to have two certificates?

Absolutely not. One certificate only. That certificate must identify master association and any fees. Otherwise uncollectable. But see my comment about future years above.

Sikubali jukumu. Read all posts at your own risk.

IoanaS (Pennsylvania)
Posts: 15

Posted:

Thank you!

BillH10 (Texas)
Posts: 1,217

Posted:

Ioana, in your original post you stated the 3407 was provided to you by the company which manages the estate. Did that company actually prepare the 3407 or did they obtain it from the management company or association and pass it along to you?

As others have stated, I am not an attorney however, I agree with your statement in your original post--this seems to be where the breakdown occurred. I would ask, what business does the company which manages the estate have preparing the 3407, if that is what occurred. And why did not the management company or association prepare it, again, if that is what occurred.

Were you given copies of the governing documents of the association when you purchased the property. Do they indicate the existence of two associations?

Before you get into this too deeply with an attorney, you should ask the attorney if it is reasonable to expect the Association to reimburse your costs if this is their error. I don't know how much money is involved in the Proprietary Association fee, if it is not significant you may wish to negotiate with the Association on a compromise amount as attorney fees can mount up very quickly, especially if you have to pay them.

IoanaS (Pennsylvania)
Posts: 15

Posted:

Hi,
I guess I'm getting a bit confused on your question.i has a realtor and a settlement company who took care of all paperwork however at the time of the purchase I was not aware of the two associations. The Condo Association was handled by a Property Management Company (still is) and thie property management company provided the 3407 certificate. Not sure if I'm answering to your question.
In 2014 seems the proprietrary association was handled by some one else ( not the one who handles the condo) but as of Jan 1st they now both handled by one- the one who issued the resale certificate.
I am having an issue to agree of being part of two associations, two board of directors- everything two....that is not what I agreed upon at the settlement.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Ioana,

Like Bill, I was also confused by part of your original statement. You wrote: "the 3407 resale certification that was provided by the company who manages the estate."

The problem word is "estate." Your statement implies that you purchased this unit from the executor of a deceased person's estate and that they were the ones who provided the form.

From what you wrote after that, I think what you meant was that the form was provided by the condo's management company. If they (the property management company) were acting as the association's agent, the resale form would have the same legal weight as if the association itself prepared the form.

IoanaS (Pennsylvania)
Posts: 15

Posted:

Hi Larry... I apologize ... No estate. No deceased person.

BillH10 (Texas)
Posts: 1,217

Posted:

Ioana, in your original post you stated: "To me it seems what has gone wrong was the 3407 resale certification that was provided by the company who manages the estate."

I interpreted that to mean you were purchasing the property from the estate of the former owner, now deceased, and the company managing the estate provided the 3407 to you. Perhaps there was a typo or I misinterpreted what was written; that was the reason for my question. I was trying to understand the information flow.

I think you if you continue to live in the property, you will have to pay dues to both associations, regardless of whether or not the second was properly disclosed. I think your recourse will be to be relieved of any Proprietary Association dues/fees incurred prior to your being informed of the existence of the Proprietary Association. I do not see you have suffered any other monetary or material damages. You could take the position you would not have consummated the purchase had there been proper disclosure, and there may be remedies for that.

Again, I don't think there is any question you are right. However, it could cost you a great deal of time, money and angst to prove that. I recommend you weigh a negotiated settlement and closure of this matter with the Proprietary Association against months, probably years, of having this hanging over your head if you pursue legal remedies.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By BillH10 on 01/24/2015 12:19 PM
Ioana, in your original post you stated the 3407 was provided to you by the company which manages the estate. Did that company actually prepare the 3407 or did they obtain it from the management company or association and pass it along to you?

As others have stated, I am not an attorney however, I agree with your statement in your original post--this seems to be where the breakdown occurred. I would ask, what business does the company which manages the estate have preparing the 3407, if that is what occurred. And why did not the management company or association prepare it, again, if that is what occurred.

Were you given copies of the governing documents of the association when you purchased the property. Do they indicate the existence of two associations?

Before you get into this too deeply with an attorney, you should ask the attorney if it is reasonable to expect the Association to reimburse your costs if this is their error. I don't know how much money is involved in the Proprietary Association fee, if it is not significant you may wish to negotiate with the Association on a compromise amount as attorney fees can mount up very quickly, especially if you have to pay them.

Bill

PA's 3407 is a mandatory document on every condo conveyance with severe consequences to the Condo for any errors.

In PA, 3407s are often prepared by the MC, but the association is still fully responsible for its content no matter who fills it out.

The 3407 is part of a resale certification packet that include all of the organizing docs, current budget, rules & regs, etc. But the 3407 document is the summary sheet that must clearly answer the 3407 questions required under the statute.

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By NpS on 01/24/2015 1:21 PM

Posted By BillH10 on 01/24/2015 12:19 PM
Ioana, in your original post you stated the 3407 was provided to you by the company which manages the estate. Did that company actually prepare the 3407 or did they obtain it from the management company or association and pass it along to you?

As others have stated, I am not an attorney however, I agree with your statement in your original post--this seems to be where the breakdown occurred. I would ask, what business does the company which manages the estate have preparing the 3407, if that is what occurred. And why did not the management company or association prepare it, again, if that is what occurred.

Were you given copies of the governing documents of the association when you purchased the property. Do they indicate the existence of two associations?

Before you get into this too deeply with an attorney, you should ask the attorney if it is reasonable to expect the Association to reimburse your costs if this is their error. I don't know how much money is involved in the Proprietary Association fee, if it is not significant you may wish to negotiate with the Association on a compromise amount as attorney fees can mount up very quickly, especially if you have to pay them.

Bill

PA's 3407 is a mandatory document on every condo conveyance with severe consequences to the Condo for any errors.

In PA, 3407s are often prepared by the MC, but the association is still fully responsible for its content no matter who fills it out.

The 3407 is part of a resale certification packet that include all of the organizing docs, current budget, rules & regs, etc. But the 3407 document is the summary sheet that must clearly answer the 3407 questions required under the statute.

Correction: ... severe consequences to the Condo association for any errors.

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By NpS on 01/24/2015 1:25 PM

Posted By NpS on 01/24/2015 1:21 PM

Posted By BillH10 on 01/24/2015 12:19 PM
Ioana, in your original post you stated the 3407 was provided to you by the company which manages the estate. Did that company actually prepare the 3407 or did they obtain it from the management company or association and pass it along to you?

As others have stated, I am not an attorney however, I agree with your statement in your original post--this seems to be where the breakdown occurred. I would ask, what business does the company which manages the estate have preparing the 3407, if that is what occurred. And why did not the management company or association prepare it, again, if that is what occurred.

Were you given copies of the governing documents of the association when you purchased the property. Do they indicate the existence of two associations?

Before you get into this too deeply with an attorney, you should ask the attorney if it is reasonable to expect the Association to reimburse your costs if this is their error. I don't know how much money is involved in the Proprietary Association fee, if it is not significant you may wish to negotiate with the Association on a compromise amount as attorney fees can mount up very quickly, especially if you have to pay them.

Bill

PA's 3407 is a mandatory document on every condo conveyance with severe consequences to the Condo for any errors.

In PA, 3407s are often prepared by the MC, but the association is still fully responsible for its content no matter who fills it out.

The 3407 is part of a resale certification packet that include all of the organizing docs, current budget, rules & regs, etc. But the 3407 document is the summary sheet that must clearly answer the 3407 questions required under the statute.

Correction: ... severe consequences to the Condo association for any errors.

Oh, I forgot to mention, the 3407 includes all monies outstanding at closing. The Condo association under PA law cannot collect any amount not listed. Under the circumstances that Iona described, there is no wiggle room for the association. So definitely worth speaking to an attorney if amount is significant.

Sikubali jukumu. Read all posts at your own risk.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Ioana,

A lot of conflicting information has been thrown in your path. Your title company apparently failed to find a master association and your own condo association, through its management company, certified that there is none and cannot possibly be one. But the board of directors now claims that there is a master association.

If I were in your position, I would start by locating copies of the CC&R's for both the condo and the alleged master association. I would also pull up the plats for both.

From time to time there are threads on this forum about associations who do not understand their geographical limitations and try to assess people who are not members. What you need to do is to verify through the recorded documents whether there is a master association and what obligations, if any, you may have to it.

BillH10 (Texas)
Posts: 1,217

Posted:

Thanks for the information, it is much the same here in Texas.

IoanaS (Pennsylvania)
Posts: 15

Posted:

Thank you all...

NpS (Pennsylvania)
Posts: 4,216

Posted:

Larry.

Even if Ioana checks and finds out that her unit is restricted by both sets of CC&Rs and plats, the failure to disclose the amount due to the master association on the 3407 makes her exempt from paying the pre-closing obligations.

The failure to disclose the existence of the master association on the 3407 may have different consequences and Ioana should consult an attorney on that.

Agree that she should collect copies of the documents she referenced and bring them to the lawyer.

Sikubali jukumu. Read all posts at your own risk.

IoanaS (Pennsylvania)
Posts: 15

Posted:

I would like to mention that the Proprietary Association is looking to collect the dues and capital contribution after the closing. I've been told the previous owners were paying both: condo and proprietary
Don't feel is right after 7 months to be responsible for their neglect.
1) condo association by not disclosing about the other association
2) proprietary by not realizing they weren't collecting for past 7 months until I brought this up when I received the letter with the increase
3) the disclosure of the second association before settlement could have been crucial on my decision to go ahead with the purchase

TimB4 (Tennessee)
Posts: 21,059

Posted:

Iona,

It seems that the consensus is to seek a legal opinion from a qualified attorney.

Seeking this opinion sooner rather than later is a must since the POA will likely start collection process for non-payment at some point in time. Therefore, you may or may not want the attorney to respond to the POA about those assessments (sometimes it helps, sometimes it escalates the issue).

IoanaS (Pennsylvania)
Posts: 15

Posted:

Quote:

Posted By NpS on 01/24/2015 11:45 AM

Posted By IoanaS on 01/24/2015 11:14 AM
The resale certification I have is incorrect. Am I suppose to have two certificates?

Absolutely not. One certificate only. That certificate must identify master association and any fees. Otherwise uncollectable. But see my comment about future years above.

Hi-
I was reading again the emails received from one of the board of directors, quote " there are separate resale certificates done for both associations"
So how we ( me, realtor, settlement company) suppose to know when the condo assoc marks no other associations on their 3407 : ( I just can't get over this...

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By IoanaS on 01/25/2015 3:38 PM

Posted By NpS on 01/24/2015 11:45 AM

Posted By IoanaS on 01/24/2015 11:14 AM
The resale certification I have is incorrect. Am I suppose to have two certificates?

Absolutely not. One certificate only. That certificate must identify master association and any fees. Otherwise uncollectable. But see my comment about future years above.

Hi-
I was reading again the emails received from one of the board of directors, quote " there are separate resale certificates done for both associations"
So how we ( me, realtor, settlement company) suppose to know when the condo assoc marks no other associations on their 3407 : ( I just can't get over this...

Time to lawyer up.

Sikubali jukumu. Read all posts at your own risk.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By IoanaS on 01/25/2015 3:38 PM

Posted By NpS on 01/24/2015 11:45 AM

Posted By IoanaS on 01/24/2015 11:14 AM
The resale certification I have is incorrect. Am I suppose to have two certificates?

Absolutely not. One certificate only. That certificate must identify master association and any fees. Otherwise uncollectable. But see my comment about future years above.

Hi-
I was reading again the emails received from one of the board of directors, quote " there are separate resale certificates done for both associations"
So how we ( me, realtor, settlement company) suppose to know when the condo assoc marks no other associations on their 3407 : ( I just can't get over this...

The settlement company should find out about all associations by researching the deed and all encumbrances, that's what they get paid to do. Without having access to all of your paperwork and spending time researching, it really isn't possible for anyone here to solve your problem. Follow the advice several have already given you to get an attorney. You might have recourse against the settlement company, the association, or others.

Escaped former treasurer and director of a self managed association.

IoanaS (Pennsylvania)
Posts: 15

Posted:

Thank you all. Unfortunately I will have to do just that...

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Iona

How much would the yearly dues of the association you knew nothing about be?

Thanks

JohnC46 (South Carolina)
Posts: 14,265

Posted:

NPS

Are you claiming/believe there should only be one 3407 for a unit regardless of how many associations that unit falls under?

Thanks

IoanaS (Pennsylvania)
Posts: 15

Posted:

Quote:

Posted By JohnC46 on 01/26/2015 4:19 AM
Iona

How much would the yearly dues of the association you knew nothing about be?

Thanks

Hi John
From what I found out in 2014 were $34/month, in 2015 doubled up to $69/month. This is in addition to the condo association fee. Even though $69 might not seem a big dollar amount for many but the aggressive rate increase and the fact that in my eyes the unit is less appealing to potential customers when will be up for resale it is what I am not happy with.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JohnC46 on 01/26/2015 4:21 AM
NPS

Are you claiming/believe there should only be one 3407 for a unit regardless of how many associations that unit falls under?

The 3407 is a mandatory disclosure document. The buyer has 10 days from receipt of the 3407 to cancel the sale for any reason whatsoever and to recover ALL deposit monies. That's a big deal.

The association cannot collect any funds not identified in the 3407 (this is the only part where I have a question and I distinguished in my posts between monies owed at the time of closing and monies owed later.) On the former, there is an absolute ban on collection. On the latter, it may have to be litigated - not sure - but it is still makes the 3407 defective if not identified.

The exact language can vary, but below is an exerpt from the PA Association of Realtor's version of the 3407 that must be answered:

15. The Association q is,q is not, a master association or part of a master association. The
declaration of the Association q does,q does not, allow the Association to become a
master association or to become part of a master association.

To me it's pretty black and white.

I guess that there could be 2 3407s, one for each association. But IMO, they would have to arrive at the same time. Otherwise, what good is the 10 day rule?

Sikubali jukumu. Read all posts at your own risk.