By Curtis E. Aldendifer, Associate Legal Counsel
As mandated by legislation effective January 1, 2012, owners of residential real estate are now required (with certain statutory exceptions) to furnish purchasers with a revised Residential Property Disclosure Statement. The Statement is set forth in the recently amended Rule A.0114 and available on the Commission’s Web site, www.ncrec.gov.
Now four pages in length and titled “Residential Property and Owners’ Association Disclosure Statement,” the revised form includes additional disclosures that apply when a property is governed by an owners’ association or system of mandatory covenants.
The instructions and questions 1 through 20 of the revised form remain essentially unchanged except for the addition of language in the instructions clarifying that disclosure requirements apply to sellers of condominiums, townhouses, and similar residences in the same way it applies to sellers of single-family detached residences.
The new disclosures, beginning with question 21 page 3, pertain to properties governed by an owners’ association.
Question 21 asks whether the property is “subject to regulation by one or more owners’ association(s) and governing documents which impose various mandatory covenants, conditions, and restrictions upon the lot, including, but not limited to obligations to pay regular assessments or dues and special assessments.”
The available responses to question 21 are “yes”, “no”, and “no representation”, indicated by marking the appropriate box adjacent to the question. If the seller responds “no” or “no representation”, then the remaining questions need not be answered. However, if the seller responds “yes”, then the remaining questions, 22 through 25, must be completed.
Question 22 asks for the name of the governing owners’ association, the amount of dues or assessments and the period of time covered by each payment, and the contact information for the president of the owners’ association or the association manager. The seller may respond with “N/A” to any of the information requested by question 22 that does not apply to the property.
Question 23 is framed as a declaration that, as of the date the disclosure statement is signed, there are no dues, fees, or special assessments that have been approved as required by the applicable declaration or bylaws and are payable to the owners’ association to which the lot is subject except for those identified by the seller in the space provided. The seller should list any duly approved dues, fees, or assessments that remain payable to the governing association, and should include any fees charged by the association or management company in connection with the transfer of title to the new owner.
Question 24, also framed as a declaration, states that, as of the date the disclosure statement is signed, there are no unsatisfied judgments against or pending lawsuits involving either the property or lot to be conveyed or the planned community or association to which the property and lot are subject, except those identified by the seller in the space provided. The disclosure is not intended to include any action filed by the association for the collection of delinquent assessments on lots other than the lot for sale.
The last question, number 25, addresses the disclosure of any services and amenities that are paid out of the association’s regular assessments or dues and includes a list of typical services and amenities. Additional space is provided in which the seller can disclose any other services or amenities not addressed in the list paid for by association dues, or provide any additional information or explanation necessary to a full and complete disclosure.
Once completed, the disclosure form should be signed and initialed in the appropriate places and made available to all prospective purchasers.
A good broker will assist his or her owner-clients with obtaining the information necessary to complete the owners’ association disclosures. In some instances, owners’ associations and association managers will be restricted in how and to whom they furnish certain information. In order to avoid unnecessary delay in obtaining the information needed to complete the disclosure form, brokers should be aware of the association’s policies and procedures prior to requesting information needed for the disclosure statement.
The revised form on these pages bears a new name – Residential Property and Owners’ Association Disclosure Form. It remains largely unchanged until question 21 where disclosure pertaining to properties governed by an owners’ association or other controlling entity is required. Owners and purchasers sign on page one and initial on pages 2-4. The complete form is available on the Commission’s Web site and may be downloaded and printed as needed.
This article came from the Feburary 2012-Vol42-3 edition of the bulletin.