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Old 06-06-2010, 04:25 PM
 
1 posts, read 6,553 times
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define HOA resale certification
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Old 06-06-2010, 07:10 PM
 
Location: Simmering in DFW
6,847 posts, read 9,879,208 times
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It is issued by the HOA upon the pending completion of a sale. Typically they send it to the title company. It declares any fees still owed on the property being sold and also states the financial condition of the whole association. I have obtained one on every property I have purchased that had a HOA.
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Old 06-07-2010, 03:10 PM
 
Location: Grapevine, Texas
54 posts, read 87,725 times
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One more reason to find a house without an HOA.
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Old 06-07-2010, 06:29 PM
 
Location: Grapevine, Texas
6,679 posts, read 10,766,575 times
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Quote:
Originally Posted by GrapevineTxOnline View Post
One more reason to find a house without an HOA.
Exactly!!
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Old 06-16-2010, 04:47 PM
 
1,384 posts, read 1,447,639 times
Reputation: 1267
I would like to clarify the definition posted by "Squirl"

First, understand that most of the Texas Property Code statutes relating to HOA-burdened property were written by the vendors (including Sen. Carona) of HOAs. This means the HOA management companies, HOA attorneys, etc. - not the homeowners. Accordingly, the statutes are designed to benefit the vendors NOT the homeowners.

A "resale certificate" is one such gimmick and the primary beneficiaries are the management companies that sell them. Resale certificates are defined in 207 of the Texas Property Code:
Texas Property Code 207

Resale certificates offer very little to the seller or buyer. The resale certificates are primarily a money generator for the management company which will also try to impose the following fees on every home sold in the subdivision: transfer fee, resale certificate fee, certificate of compliance fee, inspection fee, entry fee, etc., etc., etc.

The only "advantage" about a resale certificate is that it provides an estoppel against the HOA to prohibit it from pursuing legal action with respect to a claim or condition that existed on the property at the time of preparation of the resale certificate but that is not listed on the resale certificate. (see 207.005) Of course, this "advantage" is only because of the questionable threat posed by the management company and HOA attorney in the first place. However, there are several problems with implementation.

There are a number of problems with implementation that effectively allows the management company to raise the claims later on.

The buyer has a right to condition the purchase of the property upon receipt of a resale certificate. However, the owner has no choice but to obtain the information from the HOA or its agent - and that's where the problems begin. The management companies know they can jeopardize a sale to extort additional money from the homeowner - and they will. Common schemes include refusing to deliver the certificate at all; refusing to deliver a certificate until just before closing and creating "violations" and "fees" out of thin air at that time; refusing to deliver a certificate unless the homeowner pays for an "inspection", a "certificate of compliance", and thus an opportunity to generate "conditions" on the resale certificate, etc. The homeowner will be forced to pay the management company to issue a "green" resale certificate.

Another common scheme is for the management company to not execute the documents as part of their standard operating procedure. They'll sell the documents, but not sign them. This is not an innocent oversight. By statute the document is valid only if signed. (Prop Code 207.001(5)) What's the buyer left with? An unenforceable resale certificate which allows the management company to make claims of "noncompliance" or "unpaid monies" or to allege "situations of noncompliance" against the buyer after the purchase.

The schemes employed by a few management companies also ensure that they don't have to disclose the existence of the "priority of payment" scam present in the subdivision. The "priority of payment scam" is synonymous with certain management companies. By this mechanism, the management company will threaten you with foreclosure unless you pay various fees to the management company. This is accomplished by diverting your assessment payments to management company designated fees thus purporting to leave the homeowner in arrears on assessments (which in turn generates another "late fee" payable to the management company). It's a real racket.

So if you buy or sell a house, don't count on the title company to make sure that the resale certificate complies with the statutory requirements and don't assume that you will be provided with notice of the "priority of payment scam". Some management companies are notorious for jeopardizing a sale in order to extort money from the seller payable to the management company under the pretext of representing the HOA.

Good luck.
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Old 02-18-2011, 02:34 PM
 
41 posts, read 47,242 times
Reputation: 35
Another reason to stay away from HOAs

HOA attorneys are in the business of foreclosure and buying and selling foreclosed property


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Old 04-08-2011, 12:24 PM
 
1 posts, read 5,627 times
Reputation: 16
Default Re-Sale Certificate

I wouldn't write off the Re-Sale Certificate so cavalierly. In commercial real estate it is common to get formal estoppels, including from all of the tenants. This is usually in a form acceptable to buyer and seller. The general form used for residential is less than you get on a commercial transaction, generally because of the amount of detail the buyer and seller demand and negotiate. However, the title company will amend the title exceptions on Schedule B to read HOA Dues for the year xxxx not yet due and payable. This should then only reflect the current year (or next year if the dues are paid for the current year). So, if the HOA tries to get prior years dues, you have a title policy for which you may file a claim to have the title company defend you (they will normally pay the disputed amount). It would be incompetent for the title company to get an unsigned Resale Certificate. I provide this Resale Certificate for our HOA and I always sign them. And, I get the title company to collect any past dues at the closing and send them to me. (Note that the title company also amends the property tax exception on Schedule B in the same way when they get the tax certificate and I haven't run across title companies that incompetently dealt with tax certificates or unsigned HOA Resale Certificates ).

It is likely that most people are unaware of the dues coverage or that the year has been amended since most individuals never get or read the title commitment they should be getting from the title company promptly after they sign a purchase and sale contract. You can also forget about help from a Realtor as they are barred from interpreting this for you (most are not competent to do so anyway) as there is little actual real estate knowledge required to become a Realtor and more marketing and selling classes. I would at least try to get a licensed Broker (not Realtor or Salesperson) from the company with which you are working to go over the title commitment with you. Generally, brokers do have more detailed real estate knowledge and can explain (not in legal terms) some of the matters in more detail.

In general, you also have the right to get a copy of the most recent financial statements of the HOA at the time of any transaction as well as a copy of the bylaws and formation documents (these are probably also recorded documents except the financial statements and should be provided to you by the title company promptly following the signing of a contract and these are reflected in item 1 in Schedule B). You should also get a copy of the financial statements every year and the seller should provide to the buyer. But most sellers are lazy and want someone else to do it for them.

As for a number of the other fees quoted, like inspection fees, etc, this will depend onthe HOA and the level of detail requested in the Resale Certificate. If one wants to know if the house is in compliance with specific Subdivision Archtiectural standards or that there aren't any viloations at the property ( a fence built over a property line that the HOA was unaware of, or a carport addition, or some other matter that violates any requirements) I would think the buyer would want to know about it. It is likely the seller that created the problem and now wants the buyer to take the finanical obligation for a cure? Who's going to make the inspection, your neighbor you don't like who's on the board or an independent party who gets paid? Also, you really think I like paying to copy (and fax/courier/overnight) the documents on behalf of every homeowner/seller that already has a copy of them and is too lazy to copy them themselves (and you want me to deliver them at a moment's notice while I am working in my real job and no one bothered to contact the HOA until the day of, or day before closing)?

I'm not arguing that some HOA rules aren't onerous. Many times, the board members create personal kingdoms and want to be arbiters of what flowers you plant or some other stupid control item. Other times, it's hard just to get anyone interested to serve on the board and take the crap from all of the non-paying members who complain about everything and offer nothing. Balance it out how you want.......






Quote:
Originally Posted by IC_deLight View Post
I would like to clarify the definition posted by "Squirl"

First, understand that most of the Texas Property Code statutes relating to HOA-burdened property were written by the vendors (including Sen. Carona) of HOAs. This means the HOA management companies, HOA attorneys, etc. - not the homeowners. Accordingly, the statutes are designed to benefit the vendors NOT the homeowners.

A "resale certificate" is one such gimmick and the primary beneficiaries are the management companies that sell them. Resale certificates are defined in 207 of the Texas Property Code:
[URL="http://www.statutes.legis.state.tx.us/Docs/PR/htm/PR.207.htm"]Texas Property Code 207[/URL]

Resale certificates offer very little to the seller or buyer. The resale certificates are primarily a money generator for the management company which will also try to impose the following fees on every home sold in the subdivision: transfer fee, resale certificate fee, certificate of compliance fee, inspection fee, entry fee, etc., etc., etc.

The only "advantage" about a resale certificate is that it provides an estoppel against the HOA to prohibit it from pursuing legal action with respect to a claim or condition that existed on the property at the time of preparation of the resale certificate but that is not listed on the resale certificate. (see 207.005) Of course, this "advantage" is only because of the questionable threat posed by the management company and HOA attorney in the first place. However, there are several problems with implementation.

There are a number of problems with implementation that effectively allows the management company to raise the claims later on.

The buyer has a right to condition the purchase of the property upon receipt of a resale certificate. However, the owner has no choice but to obtain the information from the HOA or its agent - and that's where the problems begin. The management companies know they can jeopardize a sale to extort additional money from the homeowner - and they will. Common schemes include refusing to deliver the certificate at all; refusing to deliver a certificate until just before closing and creating "violations" and "fees" out of thin air at that time; refusing to deliver a certificate unless the homeowner pays for an "inspection", a "certificate of compliance", and thus an opportunity to generate "conditions" on the resale certificate, etc. The homeowner will be forced to pay the management company to issue a "green" resale certificate.

Another common scheme is for the management company to not execute the documents as part of their standard operating procedure. They'll sell the documents, but not sign them. This is not an innocent oversight. By statute the document is valid only if signed. (Prop Code 207.001(5)) What's the buyer left with? An unenforceable resale certificate which allows the management company to make claims of "noncompliance" or "unpaid monies" or to allege "situations of noncompliance" against the buyer after the purchase.

The schemes employed by a few management companies also ensure that they don't have to disclose the existence of the "priority of payment" scam present in the subdivision. The "priority of payment scam" is synonymous with certain management companies. By this mechanism, the management company will threaten you with foreclosure unless you pay various fees to the management company. This is accomplished by diverting your assessment payments to management company designated fees thus purporting to leave the homeowner in arrears on assessments (which in turn generates another "late fee" payable to the management company). It's a real racket.

So if you buy or sell a house, don't count on the title company to make sure that the resale certificate complies with the statutory requirements and don't assume that you will be provided with notice of the "priority of payment scam". Some management companies are notorious for jeopardizing a sale in order to extort money from the seller payable to the management company under the pretext of representing the HOA.

Good luck.

Last edited by fool1; 04-08-2011 at 12:42 PM..
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Old 04-26-2012, 02:00 AM
 
1,384 posts, read 1,447,639 times
Reputation: 1267
Quote:
Originally Posted by fool1 View Post
I wouldn't write off the Re-Sale Certificate so cavalierly. In commercial real estate it is common to get formal estoppels, including from all of the tenants. This is usually in a form acceptable to buyer and seller.
The OP was not inquiring about commercial properties

Quote:
The general form used for residential is less than you get on a commercial transaction, generally because of the amount of detail the buyer and seller demand and negotiate.
No, the contents of a resale certificate are defined by statute not by negotiation between buyer and seller.

Quote:
However, the title company will amend the title exceptions on Schedule B to read HOA Dues for the year xxxx not yet due and payable. This should then only reflect the current year (or next year if the dues are paid for the current year). So, if the HOA tries to get prior years dues, you have a title policy for which you may file a claim to have the title company defend you (they will normally pay the disputed amount).
You have a stronger defense if the HOA's claims are barred at the outset by estoppel.

Quote:
It would be incompetent for the title company to get an unsigned Resale Certificate.
Yet it is standard operating procedure for a number of HOA management companies. Title companies don't bother to question it.

Quote:
I provide this Resale Certificate for our HOA and I always sign them. And, I get the title company to collect any past dues at the closing and send them to me. (Note that the title company also amends the property tax exception on Schedule B in the same way when they get the tax certificate and I haven't run across title companies that incompetently dealt with tax certificates or unsigned HOA Resale Certificates ).
The title company does not send copies of the title policy or the closing documents to the HOA's managing agent.

Quote:
It is likely that most people are unaware of the dues coverage or that the year has been amended since most individuals never get or read the title commitment they should be getting from the title company promptly after they sign a purchase and sale contract.
The HOA information will not be ready as quickly as you suggest. The homeowner's remedy is limited to requesting the HOA to provide a copy. If a copy does not show up, the homeowner can request again. If the HOA has not delivered the homeowner is limited to suing for $500, suing for performance, or filing an affidavit stating that the HOA refused to provide the resale certificate.

Quote:
You can also forget about help from a Realtor as they are barred from interpreting this for you (most are not competent to do so anyway) as there is little actual real estate knowledge required to become a Realtor and more marketing and selling classes. I would at least try to get a licensed Broker (not Realtor or Salesperson) from the company with which you are working to go over the title commitment with you. Generally, brokers do have more detailed real estate knowledge and can explain (not in legal terms) some of the matters in more detail.
HOA management company employees know even less.

Quote:
In general, you also have the right to get a copy of the most recent financial statements of the HOA at the time of any transaction as well as a copy of the bylaws and formation documents (these are probably also recorded documents except the financial statements and should be provided to you by the title company promptly following the signing of a contract and these are reflected in item 1 in Schedule B). You should also get a copy of the financial statements every year and the seller should provide to the buyer. But most sellers are lazy and want someone else to do it for them.
Who are you kidding? First of all the financial information is not going to be available "promptly following the signing of a contract". Second of all, at the time this was written there was little a homeowner could do against a managing agent or board that refused to provide the information. The law did not change with respect to record provision until the 2011 legislative session.

Quote:
As for a number of the other fees quoted, like inspection fees, etc, this will depend onthe HOA and the level of detail requested in the Resale Certificate.
This is not accurate. The "fees" are largely based upon the identity of the management company. There is no "level of detail requested in the Resale Certificate". The contents of the resale certificate are set by statute not the parties.


Quote:
If one wants to know if the house is in compliance with specific Subdivision Archtiectural standards or that there aren't any viloations at the property ( a fence built over a property line that the HOA was unaware of, or a carport addition, or some other matter that violates any requirements) I would think the buyer would want to know about it. It is likely the seller that created the problem and now wants the buyer to take the finanical obligation for a cure? Who's going to make the inspection, your neighbor you don't like who's on the board or an independent party who gets paid? Also, you really think I like paying to copy (and fax/courier/overnight) the documents on behalf of every homeowner/seller that already has a copy of them and is too lazy to copy them themselves (and you want me to deliver them at a moment's notice while I am working in my real job and no one bothered to contact the HOA until the day of, or day before closing)?
In the interest of pyramiding more fees for themselves, the management companies have come up with a scheme of requiring a "certificate of compliance" (purchased from the management company) before issuance of a resale certificate (purchased from the management company). The management companies are hardly independent and they are certainly not competent.

You've made some unflattering comments about real estate agents yet believe someone with less education and fewer qualifications should be reading and interpreting legal documents and jeopardizing the transaction between the seller and buyer under the pretext of "preserving property values"? Who are you kidding?

Whether you like it or not, when a request for subdivision information is made the HOA is supposed to provide it. The resale certificate comes from the HOA, not the owners. The resale certificate does not include documents every homeowner has.

The buyer is looking at the house, period.

Quote:
I'm not arguing that some HOA rules aren't onerous. Many times, the board members create personal kingdoms and want to be arbiters of what flowers you plant or some other stupid control item. Other times, it's hard just to get anyone interested to serve on the board and take the crap from all of the non-paying members who complain about everything and offer nothing. Balance it out how you want.......
Sounds like the HOA is undesirable for either all or the vast majority of the homeowners in either example! Get rid of the HOA and you can eliminate all the problems you described.
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Old 04-26-2012, 12:29 PM
 
14,614 posts, read 27,531,280 times
Reputation: 5075
this is not a big money maker for HOA that are smaller and run by members vs management companies

HOAs are just like anything else run by people--
good/bad/indifferent
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Old 04-27-2012, 04:55 AM
 
1,384 posts, read 1,447,639 times
Reputation: 1267
I doubt any buyer or owner has the objective of being a "money maker" for the HOA corporation.

If anything HOA corps. should be required to provide these documents freely just as any other corporation would be required to do. Instead, property owners or prospective buyers are forced to cough up hundreds of dollars for something that is nothing more than a "statement of account" and a prospectus.

If the HOA has a managing agent then the HOA board can negotiate the price that the HOA corp will pay the managing agent for providing subdivision information to prospective purchasers.
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