lt's The Law
Disclosure Required In HOA & Condo Sales
I am selling my condominium. My friends tell me I will need to give the buyer a whole lot of documents concerning the condominium association and the same documents for the homeowner association. I am confused. Can you help me understand what I will have to give the buyer?
Florida's legislature believes that buyers of condominiums and property in homeowner associations that can levy assessments should be given information about the associations before they are obligated to purchase. The disclosure mandate started with mandatory and substantial disclosure required from developers of new residential condominiums in the mid-1970s. The legislature decided to extend mandatory disclosure to non-developer condominium sellers (which would be primarily re-sales) and sellers of property within a mandatory membership homeowners association with authority to assess and lien property. Confusion arises because the disclosure required by a developer of a new residential condominium differs from that of a non-developer and disclosure by a seller in a homeowners association is different from both of the condominium requirements.
Developer disclosure in sale of new residential condominiums is the most comprehensive and voluminous. There are statutory mandates for multiple provisions which must appear in the sale contract and a laundry list of information that must be provided to a buyer. The developer must generally file with the Division of Florida Condominiums, Timeshares and Mobile Homes ("Division") and obtain approval for a prospectus which is to include summary, all condominium documents, description of the improvements, budget, contracts or leases binding the condominium association, and whether the condominium might become a timeshare. A copy of the prospectus must be given to each buyer. Developers, or their attorneys, are familiar with statutory requirements and make sure their sales personnel provide the mandated disclosure to buyers. Buyers from developers have 15 days to review the review the mandatory disclosure and elect to terminate their contract and obtain refund of deposit.
Non-developer condominium disclosure is simpler. There is only 1 mandated contractual provision, and that provision notifies the buyer that the buyer has 3 days within which to cancel the contract and obtain refund of deposit after the contract is signed and the buyer receives copy of the Declaration of Condominium, Articles of Incorporation, Bylaws and Rules of the association, the association's most recent year-end financial information, a document known as the "frequently asked questions and answers" document ("Q&A Sheet") and a governance form. The non-developer seller is not mandated to provide those documents unless the buyer requests them, but if so requested, they are provided at seller's expense.
Because the buyer in a non-developer condominium has 3 days from receipt of all mandated documents to terminate the contract, it is in a seller's best interest to make sure the buyer gets all of those documents. That effort can unknowingly fail. Many sellers and associations mistakenly provide copy of a budget instead of the most recent year end financial documents. The mandatory governance form, which is promulgated by the Division, is often left out of the package. And, if the seller has gone to a title company to get a copy of the condominium documents, the seller might only get those recorded at the Public Records, which would not include governance form, Q&A sheet, financial information or most Rules of the condominium. Because of the potential for mistakes in document provision is high it is a good idea for the seller to have the disclosure package reviewed by the seller's attorney to ensure completeness.
Mandated homeowner association disclosure is even simpler. It is the same disclosure whether from a developer or re-sale owner. Disclosure is only required if the homeowner association has mandatory membership coupled with a right to assess and lien property. For those properties, the statute mandates a disclosure summary be provided to a prospective purchaser prior to signing the contract for sale. The disclosure summary must be in form substantially similar to a form promulgated in the statute. The form advises the buyer that the property is governed by restrictive covenants that might be changed and that the buyer will be required to pay assessments, which are also subject to change. If the form is not given to the buyer prior to signing, the buyer has 3 days after receipt of the form within which to terminate the contract and get refund of the deposit.
As with condominium sales, the statutes also mandate language in the contract advising the buyer of the 3-day rescission period from date the buyer receives the required disclosure summary if the summary was not provided prior to signing the contract.
Some sellers, and even some licensed real estate sales people, believe that buyers of property in a homeowner association must be given documents similar to those mandated in condominium sales. That is not the case. The legislature's focus in homeowner association disclosure is so far limited to warning the buyer that the buyer will have to pay assessments and that the covenants or rules in the development are subject to change.
The buyer's rights under the disclosure requirements may not be waived, other than by closing.
If the contract for sale of property in a condominium or homeowner association does not include the mandated language, it is voidable by a buyer at any time. If the mandatory disclosure is not properly made, the buyer has a right of termination. Compliance with the statutes in these areas is critical and retaining an experienced attorney to ensure compliance is recommended.
By: William G. Morris, Esquire
William G. Morris is an attorney with offices at 247 North Collier Boulevard on Marco Island, Florida. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney.
Questions for this column can be sent to: William G. Morris, e-mail: email@example.com or by fax, (239) 642-0722 or
The Marco Island Eagle
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