Message for condo and townhouse buyers and sellers.

April 06,2022 | Posted By Flavia Brown in Real Estate

Much more due diligence and investigating is required when buying a condo or townhouse than when buying a single-family residence (SFR). And sellers have more disclosures and reports to give to buyers.

After an offer is accepted and ratified, condo/townhouse sellers are required to give the buyers all HOA documents, disclosures, and reports. This applies to MLS-listed properties and for-sale-by-owners (fsbos). Following are the state-mandated disclosures and reports. Refer to California Civil Codes (at the end of this post).

+ A copy of all of the governing documents of the common interest development (CID). If the association is not incorporated, the documents shall include a statement in writing from an authorized representative of the association stating that fact. (Cal. Civ. Code § 4525)

+ A statement describing any restrictions in the governing documents limiting the occupancy, residency, or use of a separate interest on the basis of age, including a statement that the restriction is only enforceable to the extent permitted by Cal. Civil Code § 51.3. This is generally for HOA's of CIDs which meet the requirements to be senior housing facilities. Other types of age restrictions in CIDS are generally not enforceable. (Cal. Civ. Code § 4525)

+ A copy of the most recently distributed annual budget report (Cal. Civ. Code § 4525.) The annual budget report includes among other information a summary of the association's reserves, a summary of the association's property, general liability, and earthquake and flood insurance policies, a summary of the reserve funding plan and a statement as to whether the association has any outstanding loans with an original term of more than one year. The full list of documents contained in the annual budget report can be found in Civil Code § 5300.

+ A written statement from an authorized representative of the association regarding the association's current regular and special assessments and fees. Also, the statement shall include any assessment and fees levied upon the seller's and any monetary fines or penalties levied upon the seller's interest which are unpaid on the date of the statement. This statement shall, in addition, include information on late charges, interest and costs of collection which as of the date of the statement are or could be made a lien upon the seller's interest in the property.

+ A summary of any notice previously sent to the owner alleging any violations of the governing documents that remain unresolved at the time of request.

+ If there has been any litigation or dispute between the builder and the association, and no settlement agreement has been reached, a copy of the initial list of defects provided to each member as required by law including a final determination as to whether that list is accurate and complete has not been made.

+ If there has been a settlement agreement between a builder and the association information required by law regarding the settlement agreement including among other items, a general description of the defects the association reasonably believes as of the date of disclosure to the homeowner, will be corrected or replaced and other information regarding the defects claimed by the association. A full list of information to be provided can be found in Civil Code § 6100.

+ Any change in the association's current regular and special assessments and fees which have been approved by the board of directors but have not yet become due and payable.

+ If there are any provisions in the governing documents that prohibit the rental or leasing of any of the separate units including a description of the prohibition and how it applies.

+ If requested by the prospective buyer, copy of the board approved minutes of the board meetings, excluding executive session meetings, conducted over the past 12 months.

Additional required documents and important information: See three blog posts: “Seller’s mandated disclosures,” “Condo/townhouse information worth reading,” and “Condo questions.”

Applicable California Civil codes:

For CC&Rs and disclosures – CC 4525, 4528, 4530, 4202, and 1102 (the most important disclosure: Transfer Disclosure Statement; form TDS).
For detaiis, search: Complete Davis Stirling cond HOA

For the entire-Davis-Stirling Common Interest Development Act, click here: https://www.cacm.org/files/2019%20Davis-Stirling%20Common%20Interest%20Development%20Act.pdf

For material facts – CC 2079. (Forms TDS and SPQ are required).

For pest control/termites – CC 1099. (required only if in the purchase agreement or by the buyer’s lender).

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