An Estoppel letter from a homeowners association is a document placed into file when a home or condominium is in escrow. The document states the seller’s annual fees for the homeowners association and indicates if the seller has paid in full or has fees due at the time of sale.
The title search company usually requests the letter on behalf of the buyer from the homeowners association board. The board becomes aware of the pending sale and the new buyer. The HOA board may also charge a fee for the letter which is placed with other escrow documents. The letter is legally binding and must be accurate.
Homeowners Association assessments
A homeowners association may have long-term plans that involve assessments. This may be for new roofing for a condominium association. A private gated community may have an assessment for improving roads, street lighting, snow removal or maintenance of other community property owned by the homeowners association. The HOA may own a community center clubhouse, parks and trail system. The buyer must be made aware of these continuing maintenance and building fees due through an established date.
Any past due amounts owed by the seller should be negotiated before escrow closes. In some states, the buyer is responsible for past due fees. Other states exempt buyers from delinquent homeowners association accounts. The fees may come out of the seller’s profits.
The seller may be a lending institution selling a foreclosure with past due fees to the HOA. Freddie Mac and Fannie Mae require the lending institution to pay the HOA fees until the property is sold.
The HOA is required to record any remediation of fees and assessments as the result of the sale to keep the records updated. The new owner is usually only responsible for current and future fees.
What buyers should know about homeowners association dues
People interested in buying homes in planned communities, including condominiums, are encouraged to learn about codes, covenants and restrictions imposed by the homeowners association. Potential buyers should know exactly what their homeowners association fees cover. Many communities have their own security personnel separate from the local police or sheriff’s department; they are employees or contractors of the HOA.
Potential buyers must also be informed of proposed future assessments for improvements. Homeowners can usually vote for or against assessments proposed by the association board. Once the assessed project is approved by the HOA board and homeowners, buyers are obligated to pay the future assessments. The costs are usually added to the monthly homeowner association fees.
Many people are attracted to planned communities with walkways, parks, community centers and other recreational facilities. These are usually pleasant, safe communities for families offering a good quality of life.
Son-Rise Property Management is a full service property management company located in Bellingham, WA. Contact us today to see how we can help you find the perfect home to rent or manage your property.