An HOA resale package is a key part of buying or selling a home in a homeowners association. It provides important details about the property, the association, and the rules that come with ownership. Both buyers and sellers rely on this package to make informed decisions. Understanding what it should include can help ensure a smooth real estate transaction.
What is an HOA Resale Package?
An HOA resale package is a set of documents and disclosures that an HOA or condo association prepares. It is typically provided when a property in the community is being sold.
The purpose of this package is to inform the buyer about the association’s rules, finances, and any ongoing issues. It can help the buyer understand their responsibilities as a future member of the association. It also serves to protect the seller by ensuring they provide all required disclosures before closing.
Many states require the provision of an HOA resale package by law. Even when no such legal requirement exists, it is considered best practice to do so anyway. It helps ensure transparency and can even prevent disputes after the sale.
Is an HOA Resale Certificate Required in Illinois?
In Illinois, a resale certificate is required for both HOAs and condominiums. This is in accordance with the Illinois Common Interest Community Association Act (765 ILCS 160/1-35) and the Condominium Property Act (765 ILCS 605/22.1).
The law requires the association to provide certain disclosures to the buyer before the closing, including:
- Statement of any liens, including unpaid assessments;
- Copy of the declaration, bylaws, and any rules and regulations;
- Statement of any capital expenditures anticipated in the current or succeeding two fiscal years;
- Statement of the status and amount of reserves;
- Copy of the current operating budget;
- Statement of any pending lawsuits or judgments against the association; and,
- Statement of insurance coverage provided for the benefit of unit owners.
Associations must furnish this package within 30 days of a written request. The law also allows associations, both HOAs and condos, to charge a reasonable fee for the package.
What Should an HOA Resale Package Include?
The exact contents of an HOA resale package will depend on state laws and the association’s governing documents. Still, there are everyday items that an HOA board should include. Let’s break them down below.
1. Resale Certificate
An HOA or condo resale certificate is a document that outlines key information about the property and the association. It often includes the current assessment amounts, any unpaid fees, and special assessments that may be due. It can also disclose if the property has any unresolved violations of community rules.
2. Governing Documents
Every HOA resale package should include the association’s governing documents. These typically include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), bylaws, articles of incorporation, and any rules and regulations.
These documents explain the community’s rules, the rights of owners, and the duties of the board. They help the buyer know what is and isn’t allowed within the community.
3. Budget and Financial Statements
A clear view of the association’s finances is one of the most essential parts of an HOA resale package. Buyers should have the ability to review the current budget, recent financial statements, and any details regarding the reserve fund.
These documents show whether the association is financially healthy and prepared for future expenses. They can also reveal if the community is likely to impose special assessments in the near future.
4. Reserve Report 
The reserve report outlines the association’s plans for major repairs and replacements of common elements. It shows an estimate of the life expectancy of every asset and the funds available to cover those costs.
A well-funded reserve is a sign of a well-managed association. In contrast, a weak reserve can signal possible future costs for major repairs. Homeowners are typically the ones who will have to bear these costs in the form of special assessments or increased dues.
5. Insurance Information
The HOA resale package should include proof of the association’s insurance coverage. This can include policies for property, liability, directors and officers (D&O) insurance, and other relevant coverage.
Buyers need this information to know what the association covers and what they must insure on their own. Many lenders also require buyers to provide a copy of this to comply with their requirements.
6. Meeting Minutes
Recent meeting minutes from board meetings can help buyers gain a clear understanding of the association’s operations and governance. These include ongoing projects, maintenance plans, and any unresolved community issues. They can also show how the board communicates with members.
7. Ongoing Litigation
If the association is involved in any lawsuits, the buyer has a right to know. Litigation can have a huge impact on property values, insurance rates, and future fees. Disclosing this information not only helps avoid future disputes, but many states also require it.
How Much Does an HOA Resale Package Cost?
The cost of an HOA resale package can vary depending on the state, the size of the association, and the amount of information required. It can range from $100 to $500 or more.
That said, some states impose limits on the amount an association can charge. In Illinois, the fee is capped at $375 for condo associations. For HOAs, Illinois law requires the fee to be reasonable.
Who Pays for the HOA Resale Package?
In many cases, the seller pays for the package as part of their closing costs. That said, buyers and sellers can include this cost as part of their negotiations.
Who is Responsible for Getting the HOA Resale Package?
Typically, the seller or their real estate agent is the one responsible for this. They will request the package from the HOA or the association’s management company. It is best to make this request early in the selling process to avoid delaying the sale.
How Long Does an HOA Resale Package Take to Obtain?
The time required to prepare an HOA resale package varies depending on the association and state laws. In Illinois, both HOAs and condo associations have a 30-day timeframe to produce the package after receiving a request. Board members should be mindful of this deadline.
Associations with professional HOA management often provide the package faster. Self-managed associations may take longer due to a lack of time or organization.
A Critical Tool
An HOA resale package is a vital component in real estate transactions within associations. It provides buyers with the information they need to make informed decisions. At the same time, it protects sellers by meeting disclosure requirements.
Hillcrest offers HOA management services to communities in Chicago. Call us today at 630-627-3303 or contact us online to request a proposal!
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