Homeowners’ Association (HOA) Addendum — RPI Form 309

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This form is used by a seller’s agent when preparing an offer to purchase, exchange or lease a unit controlled by a homeowners’ association (HOA), to provide as an addendum a checklist of HOA items the buyer has received in the marketing package delivered by the seller’s agent or will receive and review for further approval or cancellation of the transaction.

Your use of RPI Form 309

Seller disclosures

A seller’s broker and their agents have a special fiduciary agency duty, owed solely to the seller who employs the broker, to diligently market the listed property for sale. The specific objective of this employment is to locate a prospective buyer who is ready, willing and able to acquire the property on the listed terms.

On locating a prospective buyer, either directly or through a buyer’s agent, the seller’s agent owes the prospective buyer, and by extension the buyer’s agent, a limited, non-client general duty to voluntarily provide critical factual information on the listed property. Collectively, this delivery of critical information is referred to as a disclosure of material facts. Absent this delivery of factual information about the property and its operations, an asymmetry of information exists. [See RPI e-book Real Estate Principles Chapter 14]

The methods for gathering adverse facts about a property’s fundamental characteristics, as well as facts which enhance value, require the seller’s agent to actively take steps to make specific disclosures when marketing a one-to-four unit residential property for sale, actions which include:

conducting a competent visual inspection of the property to observe conditions which might adversely affect the market value of the property, and then entering any observations of adverse conditions on the seller-prepared Transfer Disclosure Statement (TDS) [See RPI Form 304];
assuring seller compliance with the seller’s duty to deliver statements to prospective buyers as soon as possible by providing the seller with statutory forms at the listing stage to be filled out, signed by the seller and returned to the agent for review, confirmation and inclusion in the marketing package to be handed to prospective buyers on their inquiry into additional property information;
strongly recommending the seller obtain third-party inspections of the property’s condition and its components (roof, plumbing, septic, water, etc.) to reduce the exposure to claims by a buyer who might discover deficiencies in the property not known to the seller or the seller’s agent; and
responding to inquiries by a prospective buyer or buyer’s agent into conditions relating to any aspect of the property with a full and fair answer of related facts known to the seller’s agent which are or might be considered detrimental to the value of the property.

As a minimum effort to be made before handing prospective buyers information received from the seller, the seller’s agent is to:

review the information received from the seller;
include comments about the agent’s actual knowledge and observations made during the visual inspection of the property which expose the inaccuracies, inconsistencies, false nature or omissions in the seller’s statements; and
identify the source of the information as the seller.

A seller’s agent on a one-to-four unit residential property owes no affirmative duty to a prospective buyer to gather or voluntarily provide the prospect with any facts unknown to the seller’s agent about:

the property’s title conditions;
the operating expenses for the property (and any tenant income) the buyer will experience during ownership [See RPI Form 306];
the zoning or other use restrictions which may affect the buyer’s future use of the property [See RPI Form 309];
the income tax aspects of the buyer’s acquisition (or seller’s disposition) of the property;
the suitability of the property based on the facts disclosed to actually meet the buyer’s objectives in the acquisition; and
information on data on any mixed use of the property.

However, when asked by the prospective buyer or a buyer’s agent about any aspect, feature or condition which relates to the property or the transaction in some way, the seller’s agent is duty-bound to respond fully and fairly to the inquiry. The response includes material facts known to the seller’s agent about the subject matter of the inquiry, and consists only of factual statements, free of half-truths, misleading statements or any form of deception.

Conversely, it is the buyer or the buyer’s agent who has a duty to care for and protect the buyer’s best interests in the purchase of property. The buyer’s agent, not the seller’s agent, is to determine what due diligence efforts are necessary to learn the extent to which the facts disclosed by the seller’s agent interfere with the buyer’s expectations for the use and enjoyment of the property before allowing the buyer to make the decision to purchase or close escrow.

Disclosing use restrictions

A buyer seeking to acquire a unit in a condominium project, or in any other residential common interest development (CID), is bargaining for living restrictions and ownership operation costs unlike those experienced in the ownership of a self-managed, single family residence (SFR).

Ownership of a unit in a condominium project includes compulsory membership in the homeowners’ association (HOA). The HOA is charged with managing and operating the entire project. [See RPI e-book Real Estate Practice Chapter 32]

Unless a seller’s agent is remiss, or simply ignorant of their duties owed to prospective buyers, the agent knows exactly which CID information and documents are needed to properly market and disclose to prospective buyers the material facts about a condominium unit or SFR within a CID the agent has listed for sale.

Accordingly, the listing stage is when the seller’s agent prepares the seller’s request to the HOA to deliver up the CID documents concerning use restrictions and HOA finances. The documents are immediately available from the association and will be delivered within 10 days of the posted or hand delivered request. [See RPI Form 135]

The seller is obligated by statute to ensure the disclosures are handed to prospective buyers as soon as practicable (ASAP). It is quite easy for the seller who owns a property in a CID to request and quickly receive the documents from the association using a Request for Homeowner Association Documents. [Calif. Civil Code §4525; See RPI Form 135]

Thus, the ready availability of the documents confirms the disclosures can, as a professional and practical matter, be made available to a prospective buyer before the seller accepts an offer.

The seller’s agent uses the Homeowners’ Association (HOA) Addendum attached to a purchase agreement, counteroffer or exchange agreement as a checklist of requested HOA items the buyer has received in the marketing package delivered by the seller’s agent. [See RPI Form 309]

HOA addendum contents

A seller’s agent uses the Homeowners’ Association (HOA) Addendum published by RPI when preparing an offer to purchase, exchange or lease a unit controlled by an HOA, to provide as an addendum a checklist of HOA items the buyer has received in the marketing package delivered by the seller’s agent or will soon receive. The buyer, with the assistance of their agent, will review the addendum for further approval or cancellation of the transaction prior to the close of escrow. [See RPI Form 309]

The HOA Addendum contains:

Facts, including whether the form is an addendum to:
- a purchase agreement;
- a counteroffer;
- an exchange agreement;
- a rental or lease agreement; or
- escrow instructions; and
- the date, the identity of the buyer, the identity of the seller and the identification of the real estate [See RPI Form 309 §1];
a check box indicating whether the buyer has received and approved or will receive on acceptance copies of the HOA’s bylaws, operating rules, Covenants, Conditions and Restrictions (CC&Rs) and related information [See RPI Form 309 §2];
the monthly assessment amount owed to the HOA and a check box indicating whether HOA claims for property defects or changes in regular or special assessments are anticipated [See RPI Form 309 §3];
a statement verifying the seller is not in violation of CC&Rs, with a blank to enter any exceptions [See RPI Form 309 §4];
a statement verifying the seller will pay HOA document and transfer fees [See RPI Form 135; See RPI Form 309 §5];
a statement assuring the buyer needs to approve the HOA’s assessments and conditions in order to close escrow [See RPI Form 309 §6]; and
a statement granting the buyer the right to terminate the agreement within ten days after they receive the HOA documents based on a reasonable disapproval of the documents. [See RPI Form 183; See RPI Form 309 §7]