By Sarah Louppe Petcher, NVAR General Counsel & Lisa Vierse May, NVAR Government Affairs Manager

Association Resale Disclosures: Separating Fact from Fiction

The passage of every new law brings its share of questions. Revisions to the Condominium (Condo) and Property Owner’s Association (POA) Acts, in particular, always generate numerous inquiries.

New regulations governing the Condo and POA Acts that went into effect on July 1 have certainly continued this trend. NVAR has learned of inconsistent, if not contradictory, implementation of this legislation by associations and their community managers in regard to fees charged, deferral of payment and other matters.

So, what are the fees? When is payment due? What are the rules for resale disclosure packet (“packet”) and Condo resale certificate (“certificate”) delivery? Below, we tackle these and other of the most frequently-asked questions from Realtors® and their clients.

Q: I thought fees for resale packets were capped at $100. Why am I being charged more?

ANSWER: Legislation in the 2007 General Assembly session changed the fees that associations may charge for packets or certificates delivered in connection with the sale of a property. Legislation passed during this year’s session further clarified allowable charges. The amount of the packet or certificate fee now hinges on whether the association is professionally managed by a common interest community manager (“CIC managed association”).

Associations that are not CIC managed may charge the actual cost for the preparation of the packet, not to exceed 10 cents per page, up to a total of $100.

CIC managed associations may charge the following:

• $125 for two electronic copies and $150 for two hard copies of the packet or certificate;
• $100 for a physical inspection of the property, if the association has architectural control over the unit; and
• A post-closing fee to change the association’s records to reflect the new purchaser.

The association or its manager may charge for the following items requested by the seller or seller’s agent:

• $25 for each additional hard copy of the packet or certificate.
• $50 to expedite delivery of the packet or certificate.
• Actual cost paid to a third-party for hand-delivery or overnight delivery of the packet or certificate.

The fees for professionally managed associations shall adjust in accordance with the United States Average Consumer Price Index every five years.

Q: What exactly is a “common interest community manager”?

ANSWER: A common interest community (CIC) manager is defined as a person or business entity that provides management services to an association for a fee or other compensation. Those management services may include the following:

• acting for the association in its business, legal, financial, or other transactions with association members and nonmembers;
• executing the resolutions and decisions of an association or enforcing the rights of the association secured by statute, contract, covenant, rule, or bylaw;
• collecting, disbursing, or otherwise controlling money or other property belonging to an association;
• preparing budgets, financial statements, or other financial reports for an association;
• arranging, conducting, or coordinating meetings of an association or the governing body of an association;
• negotiating contracts or arranging for services or the purchase of property and goods for or on behalf of an association; or,
• offering or soliciting to perform any of these services on behalf of an association.

Q: The property that I am listing has more than one community association. What are the fees in that case?

ANSWER: The Code specifically mentions this scenario. Each association may charge the fees allowed under the law, with the provision that no CIC managed association shall charge inspection fees unless it has architectural control over the lot. If the association does not have architectural control, it may only charge those fees related to the preparation and delivery of the packet or certificate.

Q: In the past, I’ve requested expedited delivery for the packet or certificate and paid the appropriate fee, only to have it take just as long as a normal request. What am I actually getting for the extra fee?

ANSWER: The law states that the association or manager may only charge $50 for expedited delivery if the inspection and the packet or certificate are completed within five business days of the request.

Timetables for other deliveries are as follows:

• initial disclosure packet or certificate: 14 days from request
• disclosure packet or certificate updates: 10 days from request
• financial updates for settlement agents: 3 business days from request

Q: I heard that fees are now deferred until settlement, but an association is asking for payment up front. How can this be?

ANSWER: The Code is very clear on this issue for CIC managed associations. It states that no association or CIC manager shall require cash, check, certified funds or credit card payments at the time requests are made for packets or certificates, packet or certificate updates or financial updates. The fees shall be collected at the time of settlement and shall be payable from the settlement proceeds. If the property does not settle within 90 days, the association or its manager may then assess those fees against the lot owner.

For non-CIC managed associations, payment deferral options are less clear. The Code is silent on when payment is due for the initial packet or certificate request. The law does state that payment for updates shall be collected at the time of settlement. One may argue that the intent of the legislation was to defer all payments to settlement. However, until this section is clarified, associations without professional management may continue to request payment at the time of the packet request.

Q: I would like to order two copies of the packet or certificate. Will I be charged for the second one?

ANSWER: The new statute has clarified this issue for CIC managed associations. The first two copies are included in the initial packet or certificate fee. If you want a third copy, the association may only charge you $25, for each additional hard copy requested. For certificates, this fee structure applies for both CIC and non-CIC managed associations.

For non-CIC managed associations, the statute is less clear. The maximum fee that can be charged for packets is $100. The statute does not provide for a second free copy. However, the statute does provide that if requested in electronic format, the seller may designate up to two additional recipients to receive the packet in electronic format at no additional charge.

Q: I would like to order two copies of the packet or certificate update. Will I be charged for the second one?

ANSWER: In this case, the new statute is the same for CIC managed and non-CIC managed associations. If someone other than the seller or his agent asks for the update in electronic format, that person may designate no more than two additional recipients to receive the specified update in electronic format at no additional charge.

In whatever format the update is requested, the seller or his agent shall receive a copy at no additional cost. However, unlike the provisions for the original disclosure packet, the statute does not provide for additional free copies of the update other than to the seller or his agent when they are not the ones requesting the update.

For certificates, the statute provides for the same fee structure as for CIC managed associations.

Q: My clients prefer to receive a paper copy of the packet or certificate, but the association prefers electronic delivery. Do I have to agree to electronic delivery?

ANSWER: No. The seller or his authorized agent may request that the packet or certificate be provided in either hard copy or electronic form. The seller may also pick up a hard copy of the packet or certificate at the association’s place of business. Packet and certificate updates and financial updates must also be provided in hard copy if requested.

Q: I ordered a packet or certificate and it was delivered but upon review it is incomplete. What can I do?

ANSWER: If the association fails to provide the documents substantially in the form dictated by the statute, then the association shall be deemed to have waived any claim for delinquent assessments or of any violation of the declaration, bylaws, rules and regulations, or architectural guidelines existing as of the date of the request with respect to the subject lot.

However, this waiver is a limited waiver. If indeed there is a violation, or a delinquent assessment, the buyer will still have to bring the unit into compliance. The association will have to pay either the first $500 for a non-professionally managed association or the first $1000 for a professionally managed association. Any cost above and beyond will be borne by the purchaser.

So what can you do? You can accept the packet or certificate as is, or you may cancel the contract. If you agree to accept it as is, as noted above the purchaser may be liable for any non-compliance with the association rules.

Q: What happens if the disclosure packet is not delivered within 14 days or if I received a disclosure packet that is dated more than 12 months ago?

ANSWER: This is the portion of the Q&A where we get repetitive! You can accept the packet or certificate as is, or you can cancel the contract. If you agree to accept the packet as is, please read the answer above as the purchaser may be liable for any non-compliance with the association rules.

ANSWER: If you have requested a packet or certificate within the past 12 months, you can request an update at a cost of $50. These updates shall include a copy of the original packet or certificate. There is no requirement that you pay the initial fees unless the request comes after the 12-month period has expired.

Q: I ordered and received a complete packet or certificate (remember this is only a hypothetical!) but it is 11 months old. My client wants to order an update. The association has 10 days to provide it to me, but doesn’t my client only have three days to make up his mind?

ANSWER: Well by now you know the answer: you can accept the packet or certificate as is, or you can cancel the contract. If you agree to accept it as is, the purchaser may be liable for any non-compliance with the association rules.

While the statute provides for a three-day right of rescission upon receipt of the packet or certificate, it does not provide a right of rescission upon receipt of an update to the disclosure. So what can you do? When drafting an offer, add language to the contract that mirrors the right of rescission language for the packet or certificate, making it applicable for an update.

Q: A Community Association told me that they were exempt from certain provisions in this law. Does this not apply to all associations?

ANSWER: The POA Act Allows associations to derogate from the act in a very limited way. In order to derogate from the Act, the association must have had, prior to the effective date of the law, specific provisions in its declaration. For example, an association may only impose a transfer fee, or require up front payment for a packet rather than deferral until settlement, if and only if there are specific provisions in its declaration to that effect and such provisions were in place prior to the effective date of the law. There is no blanket exception for associations established prior to the effective date of this law.

Q. The packet or certificate was hand delivered and the agent asked me to sign a receipt for it. I always recommended that my Purchasers not sign the “Purchaser’s Acknowledgement of Receipt […]” (forms K1126 for POA and K1025 for Condo) because it states that the packet or certificate was complete when received and there is not time to review the packet for completeness when delivered. Must my client sign the receipt?

ANSWER: NVAR published updated versions of these forms when the new statute went into effect. The new versions state that when the purchaser now signs the receipt, he only agrees that the package received should contain all the statutorily required disclosures. The forms no longer affirmatively state that the packet or certificate is complete.

As for the obligation to sign the receipt, while the Code places the burden on the sender to prove delivery for a Notice of Cancellation, it does not do so for delivery of the packet or certificate. The statute does not require a signed receipt for the hand-delivery of the packet. The statute requires a receipt only when the packet is delivered by electronic means. Delivery by United States mail is deemed to have occurred within six days after the postmark date.

Q: What can we do if an association or management company isn’t following the law?

ANSWER: One of the more significant changes in the law relates to the establishment of a Common Interest Community Board. This Board was established to regulate management companies and their supervisory and managerial employees. The Board will also receive complaints against associations for alleged violations of the Code.

Virginia’s Department of Professional and Occupational Regulation is currently hiring Board staff, accepting nominations for Board member appointments and promulgating regulations. Until these tasks are completed, the Virginia Real Estate Board will continue to oversee these areas of the Code. For further information, please contact the Real Estate Board Licensing Section at 804.367.8510 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .