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Homeowners or condo associations use a variety of governing documents to guide their operations. Depending on the size of a community and its location at times will determine the name used for these documents but below are the most common terms used in the industry.
The Articles of Incorporation, which are also known as the “Articles,” and don’t require much attention. These documents would have been filed with your secretary of state to create the association as a nonprofit organization.
The articles are brief and include things like the name, location, and purpose of the association. Though important documents, you won’t find yourself reviewing them often.
The bylaws describe how an association is required to function and the restrictions on the entity. The bylaws may also describe the Association’s rights and responsibilities, as well as details like:
It is helpful for an owner or potential buyer to review the bylaws to understand how the Condo or HOA Association functions and to be familiar with the powers of, and the restrictions on the Association.
The most important category of your association’s governing documents – and often the longest – is the CC&Rs. These are comprised of the most comprehensive information, and everything outlined within them overrules any conflicting provisions in other governing documents.
You would be able to find things like restrictions on the use of common areas and owner’s property, and an explanation of which areas are considered common. When it comes to making association amendments, those procedures are also contained within the CC&Rs along with any previously documented changes.
Your CC&Rs may also include a Community Plan or “subdivision map” that serves as a visualization of the divisions of lots. This map is usually created and filed with the county when the development is formed.
Many states require the CC&Rs to be recorded in the local county property records. Real estate agents should provide them to interested buyers for a better understanding of the restrictions, rights, and obligations of property owners within the development.
Usually HOA and Condo associations generally have a separate Rules and Regulations document too. These are a bit more detailed and are often the cause of disputes among the HOA and homeowners.
The rules and regulations include ordinances related to:
Potential owners will be looking through this document to find out if they are okay with living by the HOA’s rules and regulations. You’ll want to know the rules and regulations well. Adopting new rules and regulations is usually at the discretion of the association so long as they comply with federal and state laws, and don’t disagree with the CC&Rs.
Although every Association or HOA is different, the governing documents typically include Articles of Incorporation, Bylaws, Declaration of Covenants, Conditions and Restrictions (CC&Rs) and Rules and Regulations.
The seller or seller's agent typically furnishes the governing documents to a buyer. The seller may obtain the governing documents and other documents of the community from the HOA or Condo Association. It is important that the members of the HOA or Condo Association Board and the Owners understand the contents of the Association's governing documents.
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Depending on your State these documents can go by many different names but they basically are the same in definition in the information they provide. Lender Questionnaire can also be referred to as a Condo Questionnaire. Estoppels can go by many names such as Resale Certificate (CERT), Status Letter, Dues Payment Letter, Escrow Demand, Demand Letter, Statement of Account, Disclosure, Pay Off Demand.
An Estoppel Certificate (or Estoppel Letter) is a document often used in due diligence in Real estate and mortgage activities. It is a document often completed, but at least signed, by a tenant used in their landlord's proposed transaction with a third party. A mortgage lender intending to collateralize a tenant-occupied property or a purchaser intending to purchase such a property will often want to verify certain representations made by the landlord. It also describes the relationship between tenants and their landlord. Additionally, it includes any other important details about the rights of the current tenants living in a rental property.
In short, an estoppel letter is a summary of the most important clauses within the lease. It provides an accurate, factual snapshot of the status of a lease.
The purpose of a lender questionnaire is to determine how financially sound an association is and what factors may affect a loan that is underwritten by the lender. These include association restrictions, special assessments, and ongoing litigation in which the community association is involved.
A questionnaire is a form that either HOAs or association managers are required to fill out upon request from a lender. It provides important information about whether a condo development is "warrantable;" i.e., eligible for Fannie Mae or Freddie Mac financing.
Condominium and Homeowner Associations are governed by a series of documents that detail the responsibilities of the homeowner and the community to provide services. A resale package is a packet of vital information provided to those purchasing a condominium or a home in an association. The package includes a complete set of recorded documents that govern your association.
The Resale Package will vary from state to state. Typically, the documents included are: Annual Financials, Articles of Incorporation, Budget, Bylaws, CC&Rs, Insurance Declaration Page, Regular Meeting Minutes, Resale Certificate/Demand, Reserve Report, Rules and Regulations and architectural guidelines.