Preparing for Closing: HOA and Due Diligence
If you are in a neighborhood governed by a homeowners association, you will be required to give the buyer documents regarding the homeowner’s association. The buyer has the right to review these documents to determinate whether they want to live with the HOA guidelines. The items you will need to get are:
- All Homeowners Association declarations, bylaws, operating agreements, rules and regulations, and party wall agreements.
- Minutes of most recent annual owners’ meeting.
- Minutes of any directors or managers’ meetings during the six-month period immediately preceding the date of the purchase contract. If none of the minutes exists, then the most recent minutes should be obtained.
- The most recent financial documents which consist of the annual and most recent balance sheet, the annual and most recent income and expenditures statement, the annual budget, and reserve study, if any.
Due Diligence Documents
The buyer will most likely request a copy of certain items pertaining to the home. Start gathering the following items up:
- Survey and plans.
- Historical information regarding the home.
- Inspection of any feature or aspect of the property.
- Lead based paint report.
- Receipts from past work completed or purchases like appliances
- Permits or statements for repairs started or completed on the property.
- Any warranties.
- Any owner's manuals.
- Past insurance claim information.
- Flood plain information.
- If the home is a rental, they will need Leases, Tenant Estopel Letters, Cashflow analysis, etc..
- Any additional documentation regarding the home. For example, a list of paint colors, instructions on how to use the sprinkler system, where the mailbox is located and what the box number is. Gather anything that might be helpful to the buyer or contains information they may want or need to know.