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Real estate transactions include HOA notifications if applicable

In California and other states, a certain amount of paper work must be completed with respect to one's homeowner's association when a home is being sold. The seller is required in such real estate transactions to inform the HOA that the transaction is going to occur. As a double-check on assuring that transfer of information, the title company or closing attorney will usually get in touch with the HOA for notification purposes and to inquire whether any outstanding fees are due by the current owner.

If the seller has paid the dues in advance, the closing agent will want to determine the amount paid and the dates covered by the payment. That amount will be prorated between the seller and buyer, which will be reflected on the HUD-1 settlement statement that is distributed to the parties at closing. At the closing, the buyer will be informed by the closing agent regarding the prorated amount and the date when the buyer will have to pay the dues.

The seller will also assist the buyer at closing by providing any pertinent information regarding the HOA and its rules, including written records and any publication of the group's regulations. In some cases, the buyer will demand that information prior to signing the agreement of sale if the buyer sees a potential issue that could develop. It is critical that property restrictions and limitations on exterior decorations and landscaping be shared with the buyer at closing or earlier.

If the seller has an ongoing dispute with the HOA, such as a fence, gazebo, shed or other construction that is being formally or informally litigated, this information must get to the buyer as soon as possible. The more serious the issue, the greater the chance that it may jeopardize the consummation of the sale. In some California real estate transactions, ongoing disputes that have an economic value may be resolved by withholding funds from the seller. The closing agent will return the funds to the seller if the matter is resolved, and will apportion them accordingly if it is not settled.

Source: sfgate.com, "Notification of HOA When Purchasing", Shala Monroe, Dec. 13, 2017

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