Shared from the 8/25/2018 The Virginian-Pilot eEdition

CONDO CONVERSATIONS

Resale certificate now contains summary to simplify disclosures

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JENNIFER IRELAND

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JULIE ULRICH

YOU’VE FOUND the perfect condominium to fit your lifestyle and submitted the offer. The seller has accepted. Now it’s time to start packing, right?

Not so fast. Because there are some things you need to know, there’s a little homework to do first.

Under Virginia law, buyers who sign a purchase contract must be provided a resale certificate or disclosure packet within 14 days of contract. This packet is often a mile-high stack of documents that can be overwhelming.

Included in the packet is important information and documents, such as current association budget, financials, reserve study, copy of current bylaws, approved minutes of the board of directors, and rules and regulations. The list goes on. A buyer can cancel the purchase contract within three days of receiving the resale packet. If the buyer makes no objection during the three-day period, the purchase proceeds.

HB 923, a new Virginia law effective July 1, 2018, requires all common interest communities (condo, homeowners and property owners associations) to provide a short summary (e.g. cover sheet) of important information contained in the resale certificate or disclosure packet.

This cover sheet must be delivered at the same time as the certificate or packet. The cover sheet will provide buyers with a summary of the unique characteristics of common interest communities in general that may affect a prospective purchaser’s decision to purchase, including items specific to that community.

Below is a list of items included, along with some thoughts and questions to ponder when you are reviewing the information.

ANNUAL DUES

Keep in mind that the annual dues can fluctuate. It’s rare they’ll ever decrease. However, there’s a good chance they could increase slightly over time. Be sure to do your due diligence in reviewing the financial information included in your resale packet. Is the association following the reserve study and keeping up on maintenance? If not, that could be a red flag that an increase in assessments will be necessary before long.

RENTAL LIMITATIONS

Included in the info covered:

• Are rentals prohibited?

• Is there a limit to the number of units that can be rented in the community?

• Are you required to live in your unit a minimum amount of time before renting?

PARKING/VEHICLE RESTRICTIONS

Included in the info covered:

• Is it a decal-controlled community?

• Are parking spaces assigned to specific units?

• Are there limitations on the number and type of vehicles you can have?

• Is there designated guest parking?

• Are there any time limits imposed with respect to parking vehicles in certain areas?

PET RESTRICTIONS

Included in the info covered:

• Is there a limit to the number of pets you can own?

• Are there certain breed and/ or weight restrictions?

• Are there restrictions on the type of pets you can own?

ARCHITECTURAL GUIDELINES

Included in the info covered:

• Are there restrictions on col or and/or type of window coverings?

• Does the community allow you to display flags, or other lawn decor?

• Are grills allowed? How about satellite dishes?

LIMITATIONS ON OPERATING A BUSINESS

Included in the info covered:

• Do the association covenants prohibit home based-businesses? Or are there certain restrictions such as the time, place and manner of the operation?

• Are commercial vehicles prohibited?

PERIOD/LENGTH OF DECLARANT CONTROL

The “declarant” is the person or entity that creates the original governing documents for the association. The declarant is generally the developer of the project and usually reserves certain rights and powers to himself related to the sale of units in the project, extra voting rights, etc.

After a specified period of time, the control of the association will be turned over to the homeowners, and a board of directors will be elected. In connection with this transfer of power, there are a number of requirements as well as recommended action applicable to both declarant and the condo association.

The form will also be updated to inform the buyer he should still do his own inspections, and the packet (not the coversheet) will control if there are any discrepancies between the two. Remember, the entire packet is not just “routine paperwork” and should be carefully reviewed as your purchase bonds you to every fee, rule and regulation.

Jennifer Ireland, SRES, SFR, MRP, and Julie Ulrich, both with Howard Hanna William E. Wood, are vice-chairs of the Hampton Roads Realtors Association’s Common Interest Community Forum.

This column is relative to the real estate industry and only reflects the opinions and knowledge of those answering the questions.

To submit a question to be answered by Hampton Roads Realtors Association Realtors, email vhecht@hrra.com.

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