The New H.O.A. Condominium / Planned Community Addendum

As the Chair of the HOA Addendum workgroup, I am excited to introduce to you a newly revised HOA Condominium / Planned Community Addendum (the “HOA Addendum”), that will take effect on February 2, 2015.[1] In the past, the HOA Addendum has been justifiably viewed as a buyer form in that it is completed entirely by the buyer and submitted by the buyer to the seller. As a result of its current structure, the buyer is often left to indicate which party pays for which HOA related fees without really knowing the amount of the fees. Consequently, buyers frequently submit their offer without knowledge of facts that would enable them to make an informed decision.

In an effort to remedy this issue, the workgroup created a revised HOA Addendum that is seller generated, much like the Seller’s Property Disclosure Statement. Specifically, the form is now initiated by the seller who, when listing their home for sale, is asked to ascertain the HOA fees payable upon close of escrow and then disclose the fees on lines 19 through 33 of the revised form. Once this is done, the listing agent is instructed to upload all three pages of the HOA Addendum into the MLS, if available, 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 such as Dobson Ranch, Desert Ridge or McCormick Ranch, as well as an association for the individual subdivision that lies within the master association. On rare occasions, there may even be a third association.   All will have to be contacted by the seller, and fees payable upon close of escrow disclosed for each.

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 69 to 83, completed by the buyer, in which they submit their proposal as to which party pays for the HOA fees previously disclosed by the seller. Lastly, the fourth section consists of line 100, in which the seller can accept the buyer’s proposal. Hopefully, this new structure will enable buyers and sellers to avoid last minute surprises regarding undisclosed HOA fees that can place the transaction in jeopardy.

Finally, because the form is significantly different than the previous version, it is important that agents be aware of the changes. Please therefore help us get the word out and discuss the new form at office meetings, on blogs and other appropriate venues.

For more information see our HOA Addendum FAQs, Best Practices and HOA Addendum Webinar.

[1] Assisting me and making valuable contributions to the form were workgroup members Martha Appel, Pat Baldwin, Mike Garey, Ryan Halldorson, Jon Kitchen, Linda Lang, Trudy Moore, Wilma Purcell, June Shapiro, Patti Shaw, and Kay Wood. The workgroup was assisted by AAR staff members Scott Drucker, Nikki Salgat, Jan Steward, Cynthia Frey, and Nick Catanesi.

 Updated April 1, 2015

In February 2015, AAR launched a revised H.O.A. Condominium / Planned Community Addendum (HOA Addendum). The revised HOA Addendum incorporated sections of the earlier HOA Addendum (circa 2007), and duplicates much of the information contained in the infrequently used Seller H.O.A. Condominium / Planned Community Information (less than 50 units) form (HOA Information Form), generated in 2005. Believing the HOA Information Form to be duplicative based on the creation of the revised HOA Addendum, AAR’s Risk Management Committee voted to retire the HOA Information Form, as did the association’s Executive Committee. As a result, the H.O.A. Condominium / Planned Community Information (less than 50 unit) form has been removed from AAR’s library of forms.

About the Author: Holly Eslinger, ABR, CRB, CRS; Chair – 2014 HOA Workgroup; 2010 President of Arizona Association of REALTORS®

Tags: , , , ,