California law, under Civil Code Section 4525, requires specific disclosures be provided to HOA members upon request, so they can relay them to prospective homebuyers. Well-run HOAs should have these readily available.
Here is a checklist for buyers, sellers, and managers:
Governing documents
CC&R’s, bylaws, rules/regulations, Articles of Incorporation (or statement of non-incorporation), and Condominium Plan or Subdivision Map (not mandatory) and any amendments must be provided upon request. All prospective homebuyers should read through these thoroughly BEFORE closing escrow.
Annual reports: The Annual Budget Report, required by Civil Code 5300, is a compilation of important financial disclosures, not just the HOA’s current budget.
For example, it reveals if the association follows its reserve study recommendations, or whether there is insufficient money saved in the reserve fund account, exposing the HOA to future major borrowing or major special assessments. HOAs must have a written plan to become more adequately funded, and that plan must be disclosed annually to members.
The Annual Budget Report also includes a summary of insurance. Does the HOA have earthquake insurance or required dishonesty coverage?
The Annual Policy Statement, required by Civil Code 5310, is a collection of the HOA’s written policies.
Assessments: Buyers are entitled to know the amount of any regular, special, Â and any scheduled future special assessments.
Unresolved problems: Delinquent assessments, unpaid fines, and unresolved violations on the home in question must be disclosed.
Unique issues: Age-restricted communities must be so disclosed to prospective buyers. If the HOA has pursued a defect lawsuit, the list of defects disclosed to the builder and (if settled) the HOA’s plans to repair them must be disclosed.
Problems/violations: Has the seller not been a good HOA member? The seller must disclose any assessment arrearages, unpaid fines, and any unresolved violations involving the…
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