HOA Nickles and Dimes (disclosures, documents, agent, sale)

[thndrcloud]

We're trying to get all the ducks in a row for our close on June 30 and since we live in a HOA we have to get a 22.1 Disclosure letter from them and then the buyer has a questionnaire that they want filled out. Normally the buyer would get those from the HOA themselves but I agreed to get them when they asked in an addendum because I didn't realize I'd have to pay for them. My fault, I ordered them and will get them to the buyer.

Now my attorney's office is telling me I have to pay another $125 to get a Paid Assessment Letter. This is getting ridiculous. I can go online, log into my account and print out our entire account history for the last three or four years that will show that we're current. According to their FAQ we're paying for the liability the letter carries as well as processing fees.

Is the letter really necessary? Not to mention that in the questionnaire we're paying to have filled out there is a question asking if there are any liens, unpaid assessments, special assessments or other charges against the property that haven't been paid. Won't that cover it?

I did reply to the secretary asking these questions but her responses usually don't contain good explanations.

[middle-aged mom]

I am going to assume you live in Illinois. As such, the law governs the disclosure and it customary for many association to charge the owner/seller for the service. Afterall, why should other owners pay for the time and potential liability of your disclosure?

HOA is not obligated to give your buyer anything. Your HOA's relationship is with you.

Here is a summary of section 22.1 of the Illinois Condominium Act.

Section 22.1 of the Act governs the sale of condominium units by unit owners. It authorizes a prospective purchaser to demand that the seller obtain from the condominium association, and make available to the purchaser, a number of disclosures, including:

1. A copy of the Declaration, by-laws, other condominium instruments and any rules and regulations.
2. A statement of any liens, including a statement of the account of the unit setting forth the amounts of unpaid assessments and other charges due and owing.
3. A statement of any capital expenditures anticipated by the unit owner's association within the current or succeeding two fiscal years.
4. A statement of the status and amount of any reserve for replacement fund and any portion of such fund earmarked for any specified project by the Board of Managers.
5. A copy of the statement of financial condition of the unit owner's association for the last fiscal year for which such statement is available.
6. A statement of the status of any pending suits or judgments in which the unit owner's association is a party.
7. A statement setting forth what insurance coverage is provided for all unit owners by the unit owner's association.
8. A statement that any improvements or alterations made to the unit, or the limited common elements assigned thereto, by the prior unit owner are in good faith believed to be in compliance with the condominium instruments.
9. The identity and mailing address of the principal officer of the unit owner's association or of the other officer or agent as is specifically designated to receive notices.

The association has 30 days from the date of the request to disclose this information.The perils of Section 22.1 of the Condominium Property Act must be respected by purchaser, seller, and condominium association. Great care must be taken to avoid unforeseen liability for the negligent or intentional failure to accurately or fully disclose information to the condominium purchaser.

[thndrcloud]

You are correct that we are in Illinois and your post is the first place I've been able to find an actual list of what Section 22.1 covers so thank you very much for that! We've provided the HOA Declaration, by-laws and Rules and Regs Handbook to the buyers. I just printed out copies of the last two years of budgets and financial statements as well as that last four months of board meeting minutes as requested by the buyer. As part of the questionnaire the HOA should be providing the insurance information and principal officer's information as well as the pending suits/judgements.

That covers everything except the second item on that list. The way I'm reading that it seems as though my account statement should suffice but my interpretation is a bit biased. Am I wrong?

[middle-aged mom]

Originally Posted by thndrcloud

That covers everything except the second item on that list. The way I'm reading that it seems as though my account statement should suffice but my interpretation is a bit biased. Am I wrong?

It really should come from the HOA because there have been owners who have been known to alter information, if you know what I mean. If they will take your account statement, go for it.

Best of luck with your closing and move.

[IC_deLight]

Originally Posted by thndrcloud

We're trying to get all the ducks in a row for our close on June 30 and since we live in a HOA we have to get a 22.1 Disclosure letter from them and then the buyer has a questionnaire that they want filled out. Normally the buyer would get those from the HOA themselves but I agreed to get them when they asked in an addendum because I didn't realize I'd have to pay for them. My fault, I ordered them and will get them to the buyer.

Now my attorney's office is telling me I have to pay another $125 to get a Paid Assessment Letter. This is getting ridiculous. I can go online, log into my account and print out our entire account history for the last three or four years that will show that we're current. According to their FAQ we're paying for the liability the letter carries as well as processing fees.

Is the letter really necessary? Not to mention that in the questionnaire we're paying to have filled out there is a question asking if there are any liens, unpaid assessments, special assessments or other charges against the property that haven't been paid. Won't that cover it?

I did reply to the secretary asking these questions but her responses usually don't contain good explanations.

thndrcloud - understand that the statutes in Illinois and many other states were authored by the trade-lobby group representing HOA/COA management companies and attorneys. Your involuntary membership in the HOA/COA is the tool these groups use to extract money from you.

it is important to distinguish between an HOA and a condominium association (COA). They are both forms of involuntary associations that burden real estate, but condominium ownership is primarily a statutory form of ownership and is governed by statutes specific to condominiums.

I couldn't help but notice middle-aged mom's comment: "As such, the law governs the disclosure and it customary for many association to charge the owner/seller for the service. After all, why should other owners pay for the time and potential liability of your disclosure" (emphasis added)

That last statement is a complete fallacy. The disclosure is a disclosure by the condo association itself and about its records on your property. The managing agent is already supposed to be maintaining these records and you are supposed to have access to them. The idea that there is any additional "cost" being borne by the other members is a red herring. As to liability, well try to identify the liability that the COA has if it misrepresents numbers or fails to include all the requisite documents.

The COA is not usually the recipient of the fees. To the contrary, the managing agent is the party that creates and gets these "costs". The statute is a fee generation statute for the benefit of management companies. Many of these management companies are also trying to impose additional fees by demanding that the homeowner obtain a "certificate of compliance" or some other such nonsense before they will release the document you referred to. You might also find a management company trying to demand that you pay for an "inspection fee" and submit your property to their inspection as well - all off the books of the COA.

What the management companies have done is to get the COA (via a management agreement) to allow the management company to run up any fees it chooses at your expense off the books of the COA. These are not "costs" the COA incurred or would have ever agreed incur.

The managing agents also know that they can extract more money from the owner by jeopardizing a sale. This is accomplished, for example, by waiting until a few days before closing to claim that monies are owed or that some situation of noncompliance exists. Threatened with the face of loss of the sale, homeowners typically pay the extortionists.

Regarding the potential liability, the condo association should be held accountable for making false representations in its disclosures - and the association corp should be held liable to both the seller and buyer as appropriate. However, you will find that the statutes and managing agreements are designed to protect the vendors of the COA - not you and not the COA.

Care to indicate the name of the managing agent of the COA?