PROVEN RESULTS is a real estate blog dedicated to clearing away the smoke and providing an accurate and thought-provoking look at Colorado's residential real estate market. Dale Becker is a licensed real estate broker in Colorado.
Tuesday, February 14, 2012
WHAT HOA DOCUMENTS SHOULD BE DELIVERED TO A BUYER?
Senate Bill 100, which was signed into Colorado law in 2006, requires sellers in Common Interest Communities (CIC's) to provide buyers with certain HOA documents by the title deadline in the real estate contract.
The purpose of this law was to ensure that buyers are adaquately educated about associations finances, rules and regulations, bylaws, and governance policies.
In summary, Senate Bill 100 requires the seller to provide the following documents to a buyer:
a. the bylaws and the rules of the association;
b. the declaration;
c. the covenants;
d. any party wall agreements;
e. Minutes of the most recent annual unit owners' meeting and of any executive board meetings that occurred within the six months immediately preceding the Title Deadline;
f. the association's operating budget;
g. the association's annual income and expenditures statement; and
h. the association's annual balance sheet.
Buyers in common interest communities are required to sign a document acknowledging receipt of these governing documents, and a copy of that document is to be turned over to the HOA at closing.
Because the law requires it, however, does not mean that everyone complies. Banks, for example, often will not provide these documents to buyers of foreclosed homes despite the fact they are legally required to do so. And many HOA's will charge fees for copies of these documents... sometimes as high as $200 to $300.
The bottom line is that buyers need to know what they are entitled to have, and then take steps to make sure they receive that information. HOA's, like businesses, operate with different levels of control, regulation and financial health. It is the buyer's responsibility to understand what is happening with the HOA and to have a comfort level before closing on a home.