The new TREC Addendum for Property Subject to Mandatory Membership in a Property
Owners Association combines two paragraphs in the previous version which can
potentially cost the Seller more money at closing.
- Before April 1, 2021, Paragraph D of the Addendum required the BUYER to pay deposits for reserves/working capital required by the Association.
- The revised Addendum, however, removes that paragraph entirely, and combines it with Paragraph C.
- Since the Buyer’s responsibility is now capped at the amount entered in Paragraph C, we are seeing Sellers being responsible for payments of reserves/working capital which can be substantial.
- Since the contract always governs, we cannot collect the reserves/working capital even when the Resale Certificate specifically says that.
- Practice point: At the listing appointment, agents should ask Sellers to contact their HOA right away to obtain the costs associated with a transfer, including the amount of reserves and working capital. That way they will know if the amount entered in Paragraph C will be sufficient when an offer is presented.
- Beware of this Addendum snare.
