By: Kristie Leff
A resale certificate is a document that is prepared by a condominium association that contains certain required disclosures about the condominium unit and the association. The purpose of the certificate is to provide information to a prospective purchaser of the unit so that the purchaser can make an informed decision about whether to buy the unit.
The required disclosures are set forth in Connecticut General Statues Section 47-270. Among the more noteworthy required disclosures are the following:
- Amount of monthly common charges
- Amount of unpaid common charges and other fees currently due and payable on the unit
- The amount of reserves for capital expenditures
- The association’s operating budget
- Any upcoming capital expenditure greater than $1,000
- Whether the association has a right of first refusal or other restrain on transfer of units
- A statement of unsatisfied judgments against the association and the existence of pending suits
- Number of unit owners who are at least 60 days delinquent n common charges
- Number of foreclosure actions brought by the association within the last 12 months
- Whether there are restrictions on the use and occupancy of the unit or leasing restrictions
In some situations, an association is exempt from the obligation to provide a resale certificate. These exemptions include: if the association contains no more than 12 units, if all units are commercial units, if transfer is by way of foreclosure or deed in lieu of foreclosure, if the transfer is by court order, or if the transfer is for no consideration.
Unless an exemption applies, an association must furnish a resale certificate to the seller of the unit within 10 days of the seller’s request. The association may charge an amount up to $125, plus a statutorily allowed amount for copies, for preparing the certificate. Once the buyer gets the certificate, the buyer has five days to void the contract for purchase of the unit.
When preparing a resale certificate, it is of particular importance that the association includes an accurate statement of the amount of common charges and other fees currently due and payable on the unit. This is because the statute provides that the buyer is not liable for any amounts due on a unit unless they are set forth on the resale certificate. Therefore, if the seller has an outstanding balance due at the time of the sale for common fees, fines, or other assessments, unless the amount is disclosed on the resale certificate, the association no longer has a lien on the unit for those unpaid amounts, and cannot collect them from the new owner.
If a unit is in our office for collection and/or foreclosure, it is important that the association refer any requests for payoffs to our office, so that we can include not just the fees due to the association, but out attorney’s fees as well. The same holds true when preparing resale certificates. If a resale certificate is requested on a unit that is in our office for collection, please indicate such on the resale certificate by stating “contact Bender, Anderson and Barba for amounts due and payable” on the portion of the certificate that asks for this amount. If a resale certificate is provided by the association that does not refer the recipient to our office for the amounts due, or does not contain our attorney’s fees, it puts the association in the unfortunate position of being liable for our attorney’s fees.
If your association has any questions about the statutory requirements for resale certificates, or what information to disclose, please contact our office