Disclosures: Condo vs. Homeowner’s Associations
Dec. 19, 2016 — Condominium associations or homeowners associations (HOAs) govern many properties in Florida. While both types of associations handle general operations of the areas they oversee, the laws regulating the two are very different. This affects the way you draw up a sales contract or handle a transaction. Here are the key differences:
Condominium Associations. Chapter 718, Florida Statutes, governs condominium associations. Per section 718.503(2)(a), sellers are required to provide prospective buyers with the following documents:
- A current copy of the declaration of condominium
- Articles of incorporation of the association
- Bylaws and rules of the association
- Financial information per 718.111
- A “Frequently Asked Questions and Answers” document
- A copy of a governance form.
Once buyers receive all of these documents, they have three days to review them and decide if they want to cancel a contract agreement, based on the information contained in the documents. If a seller fails to provide these documents, it opens the door for the buyer to cancel the contract before closing.
Homeowners Associations. Chapter 720, Florida Statutes governs HOAs. Section 720.401(1)(a) does not require a seller to provide documents to buyers, but instead mandates the seller deliver a summary disclosure. This summary disclosure should contain the amount, if any, that the HOA charges owners as an assessment for living in the community, and any rent or land use fees that the property may be subject to.
Under section 720.401, the disclosure summary must be presented to the buyer before the contract is executed. If the seller fails to provide the disclosure summary before the contract is signed, Section 720.401 gives the buyer the right to cancel within three days after receipt of the disclosure or before closing, whichever occurs first.
Though a seller is not required to provide HOA documents, a purchaser of property subject to a mandatory HOA may want to obtain these documents to make sure there aren’t any rules or restrictions regarding the property and the buyer’s intended use. If you’re dealing with buyers who want this information, they should request it in their offer. This can be done in the additional terms section of the contract or via a blank addendum to the contract.
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