What Is an HOA Statement and Why Is It Important?

An HOA statement is an official document providing an overview of a property’s standing within a homeowner’s association. This document may also be called a resale certificate, estoppel letter, or closing statement. Its purpose is to offer a snapshot of all financial and legal obligations tied to a specific property at a given time. This transparency helps anyone understand the commitments associated with living in a community governed by an HOA.

Key Information Within an HOA Statement

An HOA statement includes financial and operational details about the property and its association. Financial details list current HOA dues, which may be assessed monthly, quarterly, or annually. The statement also itemizes any outstanding balances, such as unpaid dues, late fees, or fines, associated with the property. Special assessments, whether current, pending, or planned, are also included, detailing one-time fees for unexpected expenses like major repairs or common area upgrades.

The statement often references or provides copies of the HOA’s legal documents. These include Covenants, Conditions, and Restrictions (CC&Rs), which are legally binding documents outlining property use restrictions and maintenance obligations. Bylaws establish the structure and procedures for the association’s day-to-day governance, covering aspects like board elections and meeting requirements. Rules and regulations address daily operational guidelines not covered in the CC&Rs or bylaws.

The statement also provides legal and compliance information. This includes disclosures about any pending litigation involving the HOA, which could have financial implications for members. Known violations associated with the property, such as unapproved architectural changes, are also noted. Information about the HOA’s master insurance policy is provided, outlining coverage for common areas and shared structures.

Role in Property Transactions

An HOA statement is a relevant document during property transactions, serving functions for both buyers and sellers. Prospective buyers rely on this statement to conduct due diligence before committing to a purchase. It allows them to understand all financial obligations, property-specific rules, and potential liabilities, such as outstanding special assessments or ongoing litigation, ensuring an informed decision.

Sellers are obligated to provide this statement to buyers, often as a contractual requirement or due to real estate disclosure laws. This disclosure protects sellers from potential legal disputes that could arise from undisclosed information after the sale. Mortgage lenders require an HOA statement to verify there are no financial liabilities or legal issues that might negatively impact the property’s value or the buyer’s ability to meet their mortgage obligations.

The statement helps streamline the closing process by clarifying all financial responsibilities. It ensures that any prorated dues or outstanding fees are properly accounted for and transferred from the seller to the buyer. This clarity helps prevent unexpected costs or disputes at closing. The document is a legally binding certification of the seller’s financial standing with the association, protecting the new owner from inheriting prior debts.

Process for Obtaining an HOA Statement

The process for obtaining an HOA statement begins with a request initiated by the seller, their real estate agent, or the title company. Contact the HOA management company directly or, if self-managed, the HOA board. Common methods for initiating a request include online portals, dedicated request forms, email, or direct phone calls.

When making the request, information must be provided to the HOA to ensure accurate processing. This includes the full property address, the current owner’s name, and contact information for where the completed statement should be sent. The HOA uses these details to identify the property and compile all relevant financial and legal data.

Homeowners associations charge a fee for preparing and providing the statement, often called a “resale certificate fee” or “estoppel fee.” These fees can range from $100 to $500, with some states having specific caps. While the seller often bears responsibility for this fee, who pays can sometimes be negotiated as part of the sales contract. An additional “rush fee” of $50 to $150 may apply if expedited delivery, within 3 to 7 business days, is required.

Standard processing times for an HOA statement range from 10 to 15 business days, though this can vary by state and association policies. Requesting the statement early in a real estate transaction is recommended to avoid potential delays in closing. The completed statement is delivered electronically via email or a secure portal, though physical mail is also an option.