Know Your Nevada Resale Document Laws
Understanding Nevada's specific laws regarding resale documents is crucial for homeowners’ associations (HOAs) managers. These laws, outlined in NRS 116.4109, govern the types of documents that must be provided to buyers of homes within HOAs and escrow closing/title companies, as well as the fees that can be charged for these documents.
Key Points to Remember:
Required Documents:
A Resale Package, including a Resale Certificate and a copy of all governing documents, including CC&Rs, Declaration, Bylaws, Rules or Regulations, Articles of Incorporation, etc.
BOD Minutes are not required but are often requested.
An Escrow Demand with specific financial information.
Who Needs Them and Why:
Resale Package
The seller is responsible for providing these documents to the prospective buyer.
The buyer needs the documents to understand the fees and rules, as well as the regulations of the HOA, before purchasing. The Resale Certificate is included in this “up-front” package so the home buyer can make an informed decision before moving forward with the contract.
Escrow Demand
This is ordered by the escrow closing or title company to ensure a clear transfer of the title and property deed.
Timing:
Resale Package
The seller should provide the documents as soon as practically possible.
The buyer has 5 days to review and cancel the contract without penalty.
It is suitable for 90 days from the date of issuance.
Escrow Demand
This is usually ordered towards the end of the purchasing process, which is generally 30 – 60 days.
It is suitable for 15 days from the date of issuance.
Fees:
The maximum fees for both the Resale Package and the Escrow Demand are given in NRS 116.4109. This fee may be increased annually.
Section 8 of NRS 116.4109 specifically addresses fees that some companies charge that are in addition to or exceed the allowable fees and limits.
First, be sure your document vendor is NOT charging fees that are in excess of or not allowed on top of your document fees.
This includes “archiving” and credit card or “convenience” fees.
Next, it is essential to understand that the Resale Certificate (as part of the “Resale Package”) and the Escrow Demand are both required in Nevada.
(Make sure the Resale Package you are selling includes the Nevada Resale Certificate, which includes specific information.)
As a management company, you should be selling both documents (Resale Certificate and Escrow Demand) for every sale and all related associations. For example, if you manage a “master” and one of its “sub” communities, home sales require Resale Certificates and Escrow Demands for both associations. If you aren’t selling all four documents, not only is the seller out of compliance, but you are losing revenue.
Most management companies don’t take the time to audit this part of their business, so it goes unnoticed and unreported. By unreported, what I mean is the loss of revenue, although real and possibly substantial, is not reported as a loss on the company’s P&L. They report the revenue from the resale document sales as a profit, not even realizing the loss of the revenue they didn’t get. Based on reports from our clients, this is usually tens of thousands of dollars each year.
There are a few ways to audit this.
Review your monthly revenue statements from your vendor. When doing this you want to count the number of Resale Certificates and the number of Escrow Demands. The number from each should be very close. They may be off by a few due to the timing of the purchases.
Another way is to record each address that has a transfer of title and match it up with the sale or processing of both the Resale Certificate and the Escrow Demand (for all related associations if master and sub).
Your vendor may offer a report of the number of documents or products sold. This may be a source from which you can get this information.
GetDocsNow is the only online resale document provider whose technological system is based on the home’s address. Because of this, GDN is the only one who can guarantee we sell every required document for every related association every time a home is sold. As a result, our clients’ revenue has increased about 30% since switching to us. It is also easier for the management company’s employees to process orders and maintain data and documents.
Additionally, we don’t charge any extra fees, so we are NOT jeopardizing our clients with the Ombudsman.
If you’re interested in discussing this further or learning more about how we at GetDocsNow ensure you are legally and ethically maximizing profit for management companies, I can be reached at bgreene@getdocsnow.com or to schedule a conversation, click here.
Together, let's unlock the hidden profits in your HOA resale department!
Commentaires