On July 1, 2023, the new Virginia Resale Disclosure Act, Virginia Code §55.1-2307, et seq. (“RDA”) will go into effect, combining the resale package provisions of the Virginia Property Owners’ Association Act (“POAA”) and the Virginia Condominium Act (“Condo Act”). With the updated RDA, the rules for delivery of the resale certificate, what the packet should contain, and the Buyer’s recission period will all be located in one, streamlined Act – serving as the go-to place to check for these regulations. How will this change your practice? Thankfully, not much!

Resale Disclosure Packet is now “Resale Certificate.”

Previously, the term “resale disclosure packet” referred to the stack of documents you received from homeowners’ associations (“HOAs”), while “resale certificate” was the preferred term for condominiums. The RDA now refers to both packages as the “resale certificate.” It’s a small change, but it’s part of the RDA’s effort to create the same process for all types of common interest communities. §55.1-2307.

NVAR Standard Forms Updates.

The following forms have been updated for July 1, 2023 to reflect the new RDA:

1. K1321 – Residential Sales Contract & K1209 – Sales Contract for Unimproved Land.
   • Previously, there were two separate paragraphs in the sales contracts that dealt with resale certificates: one for HOAs and one for Condos. Now, these paragraphs have been combined into one titled “Virginia Resale Disclosure Act.”
   • Realtors® must use the checkboxes at the beginning of the paragraph indicating whether the property is located in an HOA or a Condo. Note that some properties can be located within both types of common interest communities, so check both if needed.
   • Realtors® will then use the blanks in part (B) to indicate where the resale certificate should be delivered. We always recommend including the information for both the Buyer and the Buyer’s agent!
2. K1389 – Extension of Review Period for Common Interest Community Resale Certificate Addendum.
   • This form was previously called “Extension of Review Period for Condominium Resale Certificate/Property Owners’ Association Disclosure Packet Addendum.”
   • The contents of the form have been combined into one section, since there is only one right of cancellation no matter how many common interest communities the property is subject to. For example, if the lot is located in Reston, it may be part of a Cluster and also the Master Reston Association. The recission period begins upon delivery of the second resale certificate, whichever it may be.
   • Tip: Use this form if the parties agree to extend the period for the Buyer to review the resale certificate after delivery. This is especially helpful if the certificate is incomplete and needs a financial update from the association. 
   • Reminder: “Common interest community” is an umbrella term for HOAs and condos.
3. K1390 – Understanding Your Rights Under the Resale Disclosure Act. 
   • This form was previously called “Understanding Your Rights Under the Virginia Condominium Act/Property Owners’ Association Act.”
   • This is a great form for Realtors® to use when advising their clients of what they need to know about the resale certificate and buying a home in a common interest community. As a bonus, sharing this form with your clients also reduces your need to interpret the RDA for them.

Fees Paid Upfront.

Previously, Sellers could wait until settlement to deduct the fees for ordering the resale certificate. Now, Sellers pay for the resale certificates upfront when making the request from the association, whether or not the association is self-managed. Realtors® should inform their seller-clients of this obligation as an estimated cost of listing their property. §55.1-2316.

Seller Requirement to Deliver the Certificate Remains the Same.

Just as before, the Seller is still required to obtain the resale certificate from the association and deliver it to the Buyer. Upon the Seller’s request (and payment of the fees), the association has 14 days to deliver the resale certificate. Delivery must be in accordance with the Seller’s request, so Realtors® should carefully review the request to the association to make sure the email addresses for the Buyer and the Buyer’s agent match with those written in the contract. Remember, if the Buyer includes multiple destinations for delivery of the resale certificate in the contract and the Seller’s request reflects this inclusion, the Buyer can argue there was no delivery if the certificate didn’t get to everyone. §55.1-2309.

Do Buyers Still Have the Right of Recission?

Short answer: Yes. §55.1-2312 gives the Buyer the right to cancel the contract within a specified timeframe. Some believe that the RDA allows for the Buyer to waive their right of recission or their right to receive the resale certificate and argue that the review period can be negotiated like a contingency. NVAR does not support this position and instead finds that the law was created to explicitly protect Buyers by giving them an adequate opportunity to see if the covenants of the association meet their needs as homeowners. Realtors® should not encourage their Buyers to waive or vary their statutory rights nor should they encourage their Sellers to pressure Buyers into waiving or negotiating them. Please remember that according to Article 13 of the Code of Ethics, Realtors® are not allowed to provide legal advice to their clients and should instead recommend their clients seek legal counsel should they need it. Advising clients to waive rights awarded to them by the law based on legal interpretations by lawyers who do not represent your client may be an ethical violation or even an unauthorized practice of law.

Timelines for the Buyer’s Right of Recission.

The Buyer’s review period of the resale certificate has not changed with the new RDA; however, the timeline is now clearer to understand, especially when the resale certificate is delivered before ratification of the contract. Here’s when Buyers may void the contract pursuant to the RDA:

1. If resale certificate is delivered before contract ratification:
   • Within 3 days of ratification date, or up to 7 days if extended by agreement.
   • Upon notice on or before the ratification date that the resale certificate is unavailable.
2. If resale certificate is delivered after contract ratification:
   • Within 3 days of delivery, or up to 7 days if extended by agreement.
   • Upon notice after ratification date that the resale certificate is unavailable.
3. At any time prior to settlement if the resale certificate is not delivered to the Buyer.

Remember that if the resale certificate is incomplete, the Buyer’s only remedy is to void. They can request an update, but this does not automatically extend the timelines above.

Further Questions.

If you have any questions about the new RDA or navigating Realtor® duties with regards to common interest communities, please contact the nvar.com/legalhotline for further information.