The New Commercial Property Owner’s Association (CPOA) Addendum

It is becoming increasingly common for commercial properties (e.g. condos, business parks, etc.) to be subject to a governing association.  However, a form akin to the Arizona REALTORS® Homeowner’s Association Addendum did not exist for commercial transactions in which the parties could disclose and negotiate those fees imposed by a CPOA.  Accordingly, this past year, a workgroup was formed to create an addendum for those commercial properties governed by an association.

As the Chair of the workgroup[1], I am excited to introduce to you a new form titled Commercial Property Owner’s Association (CPOA) Addendum (the “CPOA Addendum”), that will be released on February 1, 2020.

The CPOA Addendum should be utilized in commercial transactions, just like how the HOA Addendum is used in residential transactions.  Specifically, the form is initiated by the seller who, when listing the property for sale, is asked to ascertain the association fees payable upon close of escrow and then disclose the fees on lines 9 through 33 of the form. Once this is done, the listing agent is instructed to upload all three pages of the CPOA Addendum into the MLS or commercial information exchange, if utilized, or deliver the form to prospective buyers upon request.

In completing the form, it is critical for sellers to provide information for all associations that may govern the property. In some cases, the property may be subject to a master association, as well as an association for the individual unit that lies within the master association.

The form itself is now set up in four parts. The first portion, found on page one, includes sections in which the seller discloses the association(s) that govern the property as well as the fees charged by the association(s) upon close of escrow. The second portion, found on page two, identifies legal obligations imposed upon the parties including information that must be provided to the buyer. Third is that portion of the form from lines 72 to 98, completed by the buyer, in which they submit their proposal as to which party pays for the CPOA fees previously disclosed by the seller. Lastly, the fourth section consists of line 108, in which the seller can accept the buyer’s proposal. Hopefully, this new form will enable buyers and sellers of commercial properties to avoid last-minute surprises regarding undisclosed fees imposed by a governing association.

 

[1] I would like to extend a big thank you to those individuals that participated on the workgroup.  Without their dedication and assistance, this form would not have been created.

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