The number of small fees when selling or buying a home can be dizzying. Buyers and sellers each have closing costs, but who pays for the HOA resale package? The seller.
While most HOA costs are negotiable, the HOA resale package is the only fee that many states protect by law — requiring sellers to order and pay for the resale package in every transaction.
This article will explain what the resale package is, its importance, and why the seller pays for the resale package. Be sure to check the laws in your state.
What’s an HOA resale package?
An HOA resale package, also known as a resale certificate, is a disclosure document that helps the buyer understand the rules and regulations of the HOA, and costs including regular assessments, operating budget, and financial statements.
Within the resale package, you can expect to receive the following:
- Declaration of Restrictions (CC&Rs)
- Association Bylaws
- Rules and Regulations of the Association
- Information Statement (“Did You Know?”)
- Statement of monthly assessments and any unpaid assessments
- Current operating budget
- Current financial statement of the Association, including a summary of the reserve study
- Statement of any unsatisfied judgments and status of any pending legal action against the HOA
- Statement of any transfer fees, transaction fees, or other fees associated with the resale of a unit
- Statement describing all current and expected fees or charges for each unit, including late charges, penalties, interest rates on delinquent assessments, and additional collection costs.
What’s the difference between an HOA Demand Statement and HOA Resale Package?
An HOA demand statement, or resale demand, provides a financial overview of the seller’s HOA account.
The resale demand gives the title company or attorney the information they need to balance the account properly by either withholding and making payment on behalf of the seller who is behind on payments or crediting a seller through the buyer closing costs if they paid in advance.
Included in the demand statement are the following:
- If the account is in collections or has any violations
- Current owner’s balance due
- Total assessment amount
- Frequency of the regular assessment
- The end date the assessment is current through
- The subsequent date assessments are due
- What day assessments are regularly due
- When an assessment is delinquent
- The penalty for delinquent assessments
- How many assessment payments for the closing agent to collect
- Total fees due upon closing
Who pays for the HOA resale package?
The seller is responsible for ordering and paying for the HOA resale package in most states. Out of all the fees when buying and selling a home, the HOA resale package is the only one protected by state law.
Laws addressing who pays for the HOA resale package also detail the seller’s timeframe to order, deliver it to the buyer, and the time allocated for the buyer’s review.
In Nevada, NRS 116.4109 requires the seller to order the package within two business days of offer acceptance. If the resale package isn’t delivered to the buyer within fifteen calendar days from offer acceptance, the buyer may cancel the purchase and receive their earnest money deposit back.
The resale package must be delivered to the buyer within ten business days from the requested date in Florida.
A buyer also has a set number of days—often five calendar days—to review the resale package and approve it. The buyer’s earnest money deposit will be returned without penalty if they disapprove of the rules and regulations.
Exceptions to the requirements.
There may be exceptions to the requirement if you’re selling or disposing of the property outside of a traditional arms-length transaction.
For example, Nevada and West Virginia law allows exceptions under the following terms:
- Gratuitous disposition of a unit
- Disposition pursuant to court order
- Disposition by a government or governmental agency
- Disposition by foreclosure or deed in lieu of foreclosure
- Disposition to a dealer
- Disposition that may be canceled at any time and for any reason by the purchaser without penalty
- Disposition of a unit restricted to nonresidential purposes.
- Disposition of a unit in a planned community which contains no more than 12 units if:
- The declarant reasonably believes in good faith that the maximum assessment stated in the declaration will be sufficient to pay the expenses of the planned community; and
- The declaration cannot be amended to increase the assessment during the period of the declarant’s control without the consent of all units’ owners
How much does an HOA resale package cost?
The HOA resale package fee typically costs $100 – $400, depending on the HOA.
If you live in a sub-community within a master-planned community, you will have to order a resale package and demand statement for both the sub and master associations.
When ordering the resale package, most homeowners associations utilize third parties like HomeWiseDocs, GetDocsNow, or direct for large management companies like FS Residential.
HomeWiseDocs charges a convenience fee of $7.95 and an access & archive fee of $20.
Can you re-issue the HOA resale package if the buyer cancels?
One of the more difficult parts of paying for the HOA resale package so early into a transaction is the uncertainty of the buyer closing on the home.
This is because the buyer still has contingencies that allow them to cancel. Like the home inspection and appraisal.
Thankfully, most HOAs have a 90-day expiration date on the resale package. If you fall out of contract and can secure another buyer quickly, you will be able to deliver the same package immediately to your new buyer.
If the resale certificate does not clearly state the timeframe, call your Homeowners Association to verify before reordering or re-issuing a resale package.
Additional HOA fees you should know.
Aside from the resale package and demand statement, you may still incur more fees when buying or selling a home in an HOA. These additional fees are the account setup or transfer fees and capital contribution fees.
CIC capital contribution.
A one-time fee, often paid by the buyer, to deposit funds into a reserve account utilized for capital improvements to the property. The capital contribution fee can range as low as $75 and as high as $1,200, depending on the HOA and property type.
As a buyer, the resale package will list if the community has a one-time capital contribution fee. The capital contribution is negotiable.
CIC Transfer Fee/Setup Fee.
The CIC transfer and setup fee is another negotiable fee that the buyer often pays. This fee is the homeowners association’s cost to establish a new account for the buyer.
You can expect to pay $250 to $350 for the transfer and setup fee.
In Conclusion.
A homeowners association is a love-hate relationship. One significant trade-off for living in a well-maintained community is the number of fees you pay when buying or selling.
As a seller, you should call your homeowners association before listing your home to ask how much the resale package, demand statement, capital contribution, and account setup or transfer fees cost.
You’ll understand which fees to negotiate by knowing all the HOA fees.
When buying a home in a competitive housing market and facing bidding wars, the capital contribution and setup fee are a great way to improve your offer. Be cautious; you won’t know exactly how much a contribution fee is until you receive the resale package.
Good luck with your sale, and happy home hunting.
