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Revision to Maryland HOA Instructions Form

Posted on Mar 15, 2011 in Events, Featured by fcar

By Beau R. Pichon, Esq.

As the chairman of the FCAR Model Forms Committee, it is my duty to keep you informed concerning the latest updates to our forms library. To that end, I would like to let you know about the new and improved Maryland HOA Instructions form (form # BT029), which should replace the old Instructions form in the zipForm database in the very near future. As most of you know from experience, it can be a daunting task to be sure that you are using the correct contract addenda when the property you are working with is subject to a homeowners association. This process can be especially intimidating for new agents.

There are currently 8 different documents in the FCAR real estate forms arsenal for use when an HOA is involved. In 1995, the FCAR Board of Directors felt that it was necessary to create an instructional form to assist local Realtors® with understanding which HOA forms apply in specific situations. Since it has been 16 years since the introduction of that form, the Model Forms Committee recently decided that the form should be reviewed and revised to be sure that all the information it contains is correct and up-to-date. Below is a summary of some of the information contained in the new HOA Instructions form.

 Since the bulk of transactions that most Frederick County Realtors® work with are resales (as opposed to the initial sale of a newly constructed property), you should mainly be concerned with forms BT028, BT031, and BT034, which apply to ALL resales of properties in Maryland subject to homeowners associations. Form BT028, the HOA Resale Notice, must be provided to a buyer to notify that buyer that the property is subject to an HOA and that the seller must give the buyer certain information regarding that HOA, such as contact information, the amount of monthly dues, and the existence of any pending legal action against the HOA. Form BT031, the Transmittal of Documents & Disclosure form, should be used when giving the buyer the necessary information regarding the HOA. The HOA resale package, obtained directly from the association, should be given to the buyer concurrently with this form. Under the Maryland Homeowners Association Act, this information must be given to the buyer within 20 calendar days of contract ratification, and the buyer has 5 calendar days after receiving the information and documents to cancel the transaction.

Finally, form BT034, the Substantial & Material Amendments disclosure form, should be used in the case of any material amendments to the above disclosures, or any increases in mandatory fees to the HOA by more than 10%. The seller must disclose this information to the buyer once known to the seller, and the buyer then has 3 calendar days in which to cancel the transaction.

The forms discussed above should also be used with the initial sale of a property in an HOA of 12 or fewer lots. For the initial sale of a property in an HOA of 13 or more lots, different forms must be used. Those forms are listed in the HOA Instructions form.  The HOA Instructions form also lists which forms to use in the case of an initial sale of a property to a person who does not intend to occupy or rent the property for residential purposes. While this type of sale would rarely come up for most Realtors® in the normal course of business, if you do believe you have a transaction that fits this scenario, you should discuss it with your broker immediately.

The FCAR Model Forms Committee meets the second Thursday of each month at 9am at the FCAR offices. We encourage each broker to have at least one representative on the committee. If you are interested in joining the committee, or if you have a topic that you would like the committee to discuss, please contact me at bpichon@villagesettlements.com or visit the FCAR website at http://www.fcar.org for more information.

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