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HOA resale certificate for non functional HOA

Started by SanjayG • 6 replies • 197 views

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SanjayG (California)
Posts: 2
Posted:
Hi,
I am looking for info to provide to one homeowner who incorporated HOA and it is not functional. No dues are getting collected and no budget etc so it is not in functional state. Owner is trying to sell house so know Escrow Title company is asking for HOA resale certificate .
Is there any easy way to get rid/dissolve HOA ?
Is there any standard template for proving info to Title company e.g. HOA resale certificate ?
I do have copy of CC&R document.
ElleN (Idaho)
Posts: 4,420
Posted:
Are you sure the Davis-Stirling statute applies to this "association"? Does the association own common area?

I recommend that the first thing you do is look up the status of the corporation at the California Secretary of State site. Report back here exactly what the status of the HOA is.

At the same time, I recommend you review the following statute sections and then hire an attorney to prepare the statutorily required documents:

https://www.davis-stirling.com/HOME/Statutes/Civil-Code-4525

https://www.davis-stirling.com/HOME/Statutes/Civil-Code-4530

The reason I recommend using an attorney is because I believe the wording used in explaining why certain documents are not available is legally important.

Anticipate the buyer's lender not being happy with this situation. For one thing, if this HOA has common area or easements, insurance should be in place. From what you posted, I doubt there is any insurance.

MelissaP1 (Alabama)
Posts: 13,836
Posted:
What type of loan would the buyer be getting? Some government backed type loans like FHA, Freddie MAC and Fannie Mae require a PUD form filled out by the HOA. It's a 25 questionnaire about the "health" of the HOA. This is usually filled out by the President of the HOA during closing. A HOA resale certificate would be another similar document a HOA would need a representative of some sort in the mix.

I would find out if they are still incorporated with the state. Find out if there is a Management company involved in running. Could it be in receivership? Also hate to say it, but we don't know if it's still active HOA and members just not paying their dues. For whatever reason they don't pay and give the excuse it's because the HOA does nothing etc...

One doesn't just disband a HOA. There is a drawn out legal process. Plus our HOA would have to have a Management company in charge if we disbanded versus owner owned/operated. Disbanding an HOA isn't necessarily the answer. Plus it's a group decision not just the person trying to sell their home.
Former HOA President
SanjayG (California)
Posts: 2
Posted:
There is no common area. Owner has custom built 3 properties and sold 2 properties and was living in one.
I see on CC&R, it is recorded in County and I see name
"Declaration of Covenants , Conditions and Restrictions for Grant Line South Sixth Association "

So I looked CA sec of state and did business search by name Grant Line South and don't see anything.
I will check with Title/escrow tomorrow and see what kind of docs they require.

What kind of attorney does handle this kind of stuff ? Is it real estate attorney ?

Thanks a lot for your help.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
In this case a Real Estate attorney may do or general one familiar with contractual laws.

If this was the HOA they are a corporation. They do not deal with real estate.
Former HOA President
TerriS6 (California)
Posts: 3,284
Posted:
Quote:
Posted By SanjayG on 03/12/2024 9:33 PM
There is no common area. Owner has custom built 3 properties and sold 2 properties and was living in one.
I see on CC&R, it is recorded in County and I see name
"Declaration of Covenants , Conditions and Restrictions for Grant Line South Sixth Association "

So I looked CA sec of state and did business search by name Grant Line South and don't see anything.
I will check with Title/escrow tomorrow and see what kind of docs they require.

What kind of attorney does handle this kind of stuff ? Is it real estate attorney ?

Thanks a lot for your help.

If there is no common area, your development is not subject to the Davis-Stirling Act.
On what basis do you think a resale certificate is required?
Attorney would be community interest development attorney; however, most of them only represent boards, not individual homeowners (but there are a few.)
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By SanjayG on 03/12/2024 9:33 PM
There is no common area. Owner has custom built 3 properties and sold 2 properties and was living in one.
The definition of "common area" for the purposes here is tricky. See https://www.davis-stirling.com/HOME/Statutes/Civil-Code-4095. A careful reading of the Declaration is needed.
Quote:
Posted By SanjayG on 03/12/2024 9:33 PM
I see on CC&R, it is recorded in County and I see name "Declaration of Covenants , Conditions and Restrictions for Grant Line South Sixth Association "
I would read the Declaration carefully. Try to answer the following questions:

-- Does the Declaration require an association?

-- Does the Declaration require the association to be incorporated?

-- Does the Declaration speak of any common area or easements or anything else that the HOA must maintain? Sidewalks, roads?

-- Does the Declaration speak of any owner assessments?

If you have to meet with an attorney, in my experience being familiar with the Declaration will help save time and money.
Quote:
Posted By SanjayG on 03/12/2024 9:33 PM
So I looked CA sec of state and did business search by name [redacted per HOATalk site requirements] and don't see anything.
I checked too. I do not see signs of a HOA.
Quote:
Posted By SanjayG on 03/12/2024 9:33 PM
I will check with Title/escrow tomorrow and see what kind of docs they require.
Sounds wise.
Quote:
Posted By SanjayG on 03/12/2024 9:33 PM
What kind of attorney does handle this kind of stuff ? Is it real estate attorney ?
Assuming the title company and your realtor cannot help, ask real estate attorneys and attorneys specialized in HOAs. In your calls to attorneys, ask if the attorney would be willing to prepare the required disclosure documents, pursuant to, as you understand it, Civil Code 4525 and any other legal requirements. Explain that the Declaration seems to require a HOA, but there is no board.

It is often hard to find an attorney. If you locate one willing to take a look at this, then I would arrange an appointment on the spot.

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