By Tom Simon, Managing Member, WestGate Properties, LLC
One important service that Professional Community Association Managers perform for the communities they manage is to prepare the Condominium or HOA Resale Certificate once the home or condo unit goes under contract. The request to complete one of these disclosure documents normally comes from a real estate broker and since the HOA Act became law on July 1 of this year, I’ve noticed some confusion about when to request an HOA Disclosure Certificate as opposed to a Condo Resale Certificate.
Often the name of the community will tell you whether you are dealing with a COA or an HOA. However, sometimes the name disguises the true identity of the community, so the definitive answer is contained in the first few pages of the Declaration for the community. This is one of the documents a real estate broker should obtain from the owner when the property is listed. If you are dealing with a condominium, then the 1st or 2nd Article of the Declaration will have language similar to the following: “Submission of Property. The Declarant submits the real property…thereto to the provisions of the New Mexico Condominium Act.” Many variations exist but the central principal is that the property is subject to the Condominium Act. If you see this, then you will request a Condominium Resale Certificate and not an HOA Disclosure Certificate.
A variation on this will be the Declaration that states that it is submitted to the Building Unit Ownership Act (BUOA). Condominium communities that were formed prior to May 19, 1982, were generally formed under and “submitted to” to the BUOA. Condominium Resale Certificates are not required for communities subject to the BUOA, but should still be provided because of their importance as disclosure documents.
Future HOAs will likely have similar language that submits the community to the HOA Act but, meanwhile, you should look for language in the Declaration that refers to a “general scheme of development or covenants, conditions and restrictions for the benefit of the owners.” Don’t be fooled by someone who refers to the community as an HOA, which is often misused as a generic term referring to any community association.
These disclosures are important consumer education documents that buyers should receive with sufficient time for review prior to closing so that they can enter into the community as well-informed members. Keep in mind that the association has 10 days to provide the completed document following a written request.
Tom Simon is a Certified Manager of Community Associations (CMCA), Association Management Specialist (AMS), and Professional Community Association Manager (PCAM).