HOA Addendum Spotlight

HOA Addendum

SPOTLIGHT Presented by the Education Team at Independence Title. TREC Approved Continuing Education Provider License# 403.

q HOA Terminology

Agenda

q New HOA Rules and Laws (2021) q HOA Addendum q HOA in the Condo Contract q Best Practices

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PROPERTY OWNERS' ASSOCIATION (POA) • While most people refer to them as homeowners' associations or HOAs, the term that Texas law uses is property owners' association.

• These organizations are defined in Section 202.001 of the Texas Property Code as: “a governing body, that manages or regulates a residential subdivision, planned unit development, condominium or townhouse regime, or similar planned development."

MANAGEMENT COMPANY

• HOA management companies consist of management professionals who take on the responsibility of enforcing an HOA's policy as well as maintaining the integrity of policies. They also assist with communication between board members and residents and help handle daily operations.

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SUBDIVISION INFORMATION

• Also known as - Resale Package • As of September 1, 2021, Senate Bill 1588 amended Section 207.003 by capping the fee for a resale certificate to $375 and capping the fee at $75 for an update of a resale certificate.

RESALE CERTIFICATE • The resale certificate gives specific information about the property that is being sold and where it stands with the HOA; this incudes disclosing any past-due payments or unpaid violations, any pending violations, and all fees that are due upon closing.

https://spectrumam.com

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STATEMENT OF ACCOUNT • An HOA statement of account, is a document that details the outstanding charges owed to the association. This can be overdue assessments, charges for violations, late fees, or any other fees associated with that property.

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TRANSFER FEE • The HOA transfer fee covers all costs that the HOA will incur when transferring the ownership from the seller to the buyer.

• These are charges associated with preparing and distributing documents, updating names in databases, changing security codes and amenities passes, and other administrative costs.

• HOA transfer fees are generally in the $200-$250 range but can vary greatly.

https://spectrumam.com

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RESERVE FUNDS • The reserve fund is essentially a savings account for the HOA. It is where the HOA saves money for repairs and replacements.

• When a property is transferred to a new owner the fees can include an initial deposit into the reserve fund. There are many different terms for this including but not limited to: • Deposit for Reserve • Reserve Contributions • Working Capital • Capital Improvements https://spectrumam.com

DUES

• HOA dues are money typically paid monthly, quarterly, or annually by homeowners living within the HOA community to help maintain all properties, amenities and common areas within the association.

https://spectrumam.com

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New HOA Rules and Laws

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http://hoa.texas.gov/

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What will the management certificate include?

TEXAS PROPERTY CODE: Sec. 209.004. MANAGEMENT CERTIFICATES. (a) A property owners' association shall record in each county in which any portion of the residential subdivision is located a management certificate, signed and acknowledged by an officer or the managing agent of the association, stating: (1) the name of the subdivision; (2) the name of the association; (3) the recording data for the subdivision; (4) the recording data for the declaration and any amendments to the declaration; (5) the name and mailing address of the association; (6) the name, mailing address, telephone number, and e-mail address of the person managing the association or the association's designated representative; (7) the website address of any Internet website on which the association's dedicatory instruments are available in accordance with Section 207.006; (8) the amount and description of a fee or fees charged by the association relating to a property transfer in the subdivision; and (9) other information the association considers appropriate.

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HOA Addendum

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Section A indicates who will pay for the subdivision information. (aka resale package)

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Section B addresses changes to the subdivision information.

Section C indicates how the other fees will be allocated.

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Section D provides authorization.

Notice to Buyer

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HOA fees are as follows: Total Fees: $2100 X

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• Resale Fee: $325 • Transfer Fee/Set Up Fee: $225 • Additional info: • Collect $275 Working Capital on all sales • Collect Community Enhancement Fee equal to .3% of sales price on all closings. ü Sales Price is $425,000. ü Fee= $1275

500.00

$500

$1600

Buyer

Seller

HOA in the Condo Contract

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Condo Contract Paragraph 2

Paragraph 2 B&C

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Paragraph 2D

Paragraph 12 A. (3)

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Paragraph 12 A. (3)

Paragraph 13

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Best Practices

Listing Agents, BE PROACTIVE!!!!

• Involve your sellers.

• What are ALL the fees associated with the sale of the property?

• What is the turn around time for the Resale Package (Subdivision Information).

• Make sure there is not multiple HOA’s.

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Buyer’s Agents, Help buyers get the right info.

• Can they afford the fees?

• What are the HOA rules?

• Which amenities are included?

• Is the HOA in good standing?

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