HOA resale certificate, need or not? (disclosure, estoppel, foreclosure, agent)

[ageha]

First time buyer here. We just signed our contract and started option period. It's a bank-owned foreclosure property so the price we got is sweet. One thing keeps bugging me though, is that the seller was not willing to furnish a resale certificate b/c it's sold as-is. My guess is that if the previous owner failed to pay his property tax for 2 years (on record with tax office), he most likely have unpaid HOA dues. Will that turn out to become our problem at closing? Will the title company have access to HOA statement of account when they open the title and send us the preliminary title report? We have terms saying that any title defects, unpaid taxes and fees obtainable by title search before closing are seller's responsibility. And the seller also agreed to pay for our title policy. Does that cover upaid HOA dues?

[middle-aged mom]

In my state the seller is required to provide proof of HOA payment in order to close. Check your contract or with your attorney. And nothing precludes you from contacting the HOA. You don't ask. You don't get.

[ageha]

I've contacted HOA. But only a owner/seller/seller's agent have access to the statement of account. My agent says that in my state it's the same case that seller should pay off HOA dues before selling. Do I just have to take my agent's word for it?

[bentlebee]

You should on the HUD settlement statement see an estoppel fee that has to be paid by seller and buyer (seller to get it, they have to paid off all fees and fines, buyer to have the HOA allow them to be the new home owner) . Both are normally the same amount but soemtimes only the seller is paying an amount to get the estoppel fee. So you should be good but you can call the HOA yourself and ask if the give an estoppel letter when a seller is selling their house. If so you are good to go without any risks on that part.
If you get title ins. and a clean title (ask the title company about that) that means all is paid off. I recently had the same experience and was a little worried but all is fine and I checked over and over.

[ageha]

Thanks Bentlebee for your comment. It cmfts my stressed nerves quite a bit. I guess as long as I know that the title company will pick up the unpaid dues through their research for my buyer's title insurance, I'm happy to go forward.

[palmcoasting]

As long as your contract has something in it referring to the fact that there is a HOA, the title company will know to check with the HOA for a pay off letter. If it's not in there and the HOA doesn't have a lien on the property (which I'm sure they do) then they won't pick it up. It makes sense to call the title company and just verify they know there is an HOA involved.

[bentlebee]

Originally Posted by palmcoasting

As long as your contract has something in it referring to the fact that there is a HOA, the title company will know to check with the HOA for a pay off letter. If it's not in there and the HOA doesn't have a lien on the property (which I'm sure they do) then they won't pick it up. It makes sense to call the title company and just verify they know there is an HOA involved.

Every single property I closed on had a estoppel letter fee to prove there wasn't any late payments and everything was paid off, so in Florida(I don't know about other States) you should have it on the HUD settlement statement otherwise I wouldn't close on the property despite of what other pro's are stating here on this forum. Why did I as a seller had to pay for the estoppel letter and as a buyer also had to that? Maybe Palmcoasting can give me an answer that is better than what the title companies had told me , and that is that it should be on the HUD settlement statement otherwise you won't have prove of a clear HOA at closing.

[palmcoasting]

Well, if there is a HOA involved, and that isn't always the case, there would be an estoppel letter. But. If the title company is not aware there is a HOA involved and the HOA has filed nothing on the property, they wouldn't know if there is an outstanding balance. There should be addendums to the contract stating there is an HOA. It is a necessary disclosure. If there isn't, and while the title company should see it in the deed and other paperwork filed that there is an HOA involved, then estoppel letters should go out. But, it's just my experience to be what might be called neurotic or pro-active (depending on your outlook, lol) to call the title company and make sure they are aware an HOA is involved. Especially if it's a bank owned property because the banks claim no knowledge of the property, they've never lived there. Then yes, it would show on the HUD along with everything else. The seller is required to give clear title. Outstanding monies owed for that should (generally are) paid for by the seller at closing.

[choa05]

Is a resale certificate necessary in the state of texas we give a hoa worksheet that says what is owed past and present and transfer fees why do they need to know our balances and assets and stuff

[Lacerta]

Originally Posted by ageha

One thing keeps bugging me though, is that the seller was not willing to furnish a resale certificate b/c it's sold as-is.

I realize this is an old post, but I've never heard of a "resale certificate". Apparantly, since you all seem to have heard of it, it isn't just a local thing, but my area doesn't do such a thing.

Originally Posted by bentlebee

You should on the HUD settlement statement see an estoppel fee that has to be paid by seller and buyer (seller to get it, they have to paid off all fees and fines, buyer to have the HOA allow them to be the new home owner) . Both are normally the same amount but soemtimes only the seller is paying an amount to get the estoppel fee. So you should be good but you can call the HOA yourself and ask if the give an estoppel letter when a seller is selling their house. If so you are good to go without any risks on that part.
If you get title ins. and a clean title (ask the title company about that) that means all is paid off. I recently had the same experience and was a little worried but all is fine and I checked over and over.

Ok, I sound like a broken record, but I've never heard of an "estoppel fee" either. By the context used, I'm guessing that is what we call an "HOA transfer fee" except that only the buyer pays it here. I've also never heard of an "estoppel letter". I've worked in a real estate office for 8 years now, and been part of an HOA board, so I'm pretty sure we don't do anything "estoppel"-ish.

*Edit* Ok, I looked up "Estoppel" and it says "A bar preventing one from making an allegation or a denial that contradicts what one has previously stated as the truth." Not sure how that would apply here, so I must be misunderstanding what it is for in a closing.

Originally Posted by choa05

Is a resale certificate necessary in the state of texas we give a hoa worksheet that says what is owed past and present and transfer fees why do they need to know our balances and assets and stuff

No idea if Texas requires a resale certificate, since obviously I am out of the loop on what exactly they are, but as for the balance sheet, I would guess that is being provided to the buyer who has a right to know the workings of the HOA if they are buying a house that is going to be part of the HOA. Same as you have to give to every homeowner every year. Are they asking for something more than that?