Are you condo or townhome shopping? Let’s talk ten-day rescission periods. (This is the first part of an occasional series on HOAs.)
Once you’ve found that perfect townhome or condo, one of the first orders of business will be examining the collection of documents with which the HOA is governed. These are called “HOA docs,” “condo docs,” and other terms, but they’re basically talking about the same thing. Often, most or all of these documents are available to your agent on the MLS while the home is on the market. Once the home is under contract, the law requires that certain of these documents be provided to you as the buyer, and you then have ten days to examine them once they’ve been received. During this time, you will decide whether you want to proceed with the sale based on what you find in the HOA docs. This is called variously the “ten-day recission period” or the “statutory rescission period,” and it can be lengthened, shortened, or waived if all parties agree. At any time before the end of the rescission period, you can end the process by signing off on the documents and proceeding with the sale, or backing out of the contract entirely without penalty.
The HOA docs will likely have a substantial impact on the owner of a condo or townhome, and it’s important to read through them carefully. It is for this reason that prospective buyers are guaranteed by law time to review them before proceeding with the sale. The docs spell out which costs and responsibilities will be borne by the unit owner and which will be taken care of by the association. It is with these materials that you can know if there are any pet restrictions, if there is a rental policy, and what the rules and expectations are for common areas and community amenities. There is also important financial information about the HOA: the amount of money in its reserves to pay for capital expenses, and whether or not there are any pending assessments or any insurance or other claims against the association.
In future installments of this series, we will go through each of these required documents as well as a few others. We’ll also talk about what it is within them that you as a buyer (and your agent) should pay particular attention to.
