Understanding your Resale Certificate

by Steve Meyers

February 27th, 2017

As the seller of a condominium in Washington State, you’re required to supply the buyer with a resale certificate and all supporting documentation shortly after you enter into a purchase and sales agreement with the buyer.  The HOA’s professional management company will produce these documents for you and you’ll sign to attest to their accuracy.

There will be numerous items in the resale certificate which may cause the buyer to terminate the agreement.  It’s best to learn about these items prior to listing your condominium for sale with a real estate agent and disclosing those items in the listing information on the multiple listing service.  Those items will include whether there is a “Rental Cap”, any special assessments, the minutes of the general HOA and specific B of D meetings, the minimum rental period, pet policy, the amount in the capital reserve account, information in the most recent reserve study, delinquent assessments, FHA approvals, controlling interests, assigned parking and storage, etc.

Buyers want to know if there’s a “Rental Cap” in the building in the event they’re transferred with their company to another area or, they seek employment in a different location.  There are many scenarios for how to qualify for renting your unit so you should understand these may limit the number of buyers submitting Offer to Purchase.

The biggest issue with buyers will be the amount of capital reserves and the information in the most recent reserve study.  Buyers want to know of any additional financial obligations they may have if the current capital reserve account will not pay for all of the repairs and maintenance items that come up in the future.  Low HOA Dues may result in a poorly funded capital reserve account and high HOA Dues may indicate there’s a significant financial obligation in the near future.

Recently, VRBO’s (vacation rentals by owners) and AirBnB’s (air bed and breakfasts) have become popular.  Some condominium Declarations, Bylaws and CC&R’s address the minimum rental periods within buildings but, there are some buildings without restrictions.  Surveys have found that short-term rentals in condominium buildings have a negative effect on condominium values and are an overall negative impact to the community of owners.

If you have any comments or questions about this article, please email me at smeyers@kw.com.

Steve Meyers is a Managing Broker at Keller Williams Real Estate in Seattle, Washington.  He can be reached at (206) 972-3328 or smeyers@kw.com.

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