In Minnesota we have a Statute allowing a 10 day right to cancel a purchase agreement for any property in an Association.
When you are buying a townhome in Burnsville, Apple Valley, Rosemount or any other Minnesota City, you will have a document in your purchase agreement stipulating a 10 Day Right of Rescission after reviewing the Association Documents and Resale Disclosure.
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Itâ€™s an important escape clause for buyers, the documents should be carefully reviewed by you and your Realtor. If you donâ€™t like the information in the documents you may cancel your purcase agreement and retain the Earnest Money. Iâ€™d like to share with you my How to Reveiw the Association Documents for a Townhome checklist.
1) Read the Rules and Regulations! This section can be 5-25 pages long and is very important for the quality of living aspect. Look for specifics that are important to you including Pet Restrictions, Parking Restrictions, Use of the Land, Noise Control and Landscaping Restrictions. Many Townhome Buyers read this section first and pay little attention to the rest of the documents.
2) Read the Articles of Incorporation and Bylaws! Look in this section for information about how major decisions are made. Pay attention to how much the Monthly Association Dues can be increased per year. Most associations will have some language saying â€˜the monthly association dues cannot increase by more than 5% unless there is a two-thirds majority voteâ€™â€¦or some type of restrictions. Other topics to search for in this section include â€˜How the Association determines Rental Policyâ€™ and â€˜Is the Association Approved by FHAâ€™.
3) Clarify what the Association Maintains versus what Homeowner Maintains! Identify the details of exterior maintanence including such things as who is responsible for the deck boards, deck railings, overhead garage doors, front storm doors, windows and window casings, shrubbery, sidewalks, driveways and other items. Itâ€™s common for an association to maintain the exterior of the building but for homeowners to be responsible for â€˜moving partsâ€™ like windows, doors and garage doors.
4) Reserves and Financial Information! You should receive recent (less than 1 year old) financial information for the association. If you have not received this information, contact your agent! First, look to make sure the unit you are purchasing does not have any delinquent dues which might cause a problem at closing. Secondly, study the amount of money an association has in reserves should be proportional to the amount of money needed for operating expenses per year. If the association spends $60,000 per year on operating expenses the reserves should be about $120,000 to $180,000.
To my knowledge, there is not a steadfast rule of how much money associations must have in reserves, this is just my observation from selling townhomes in Apple Valley, Lakeville, Rosemount, Eagan and other cities.
If you are preparing to sell your townhouse in Farmington, Lakeville, Prior Lake, Eagan or Savage, take a look through your Association Documents to be sure you have all information to give the buyer. You will not be able to provide the Recent Financial information, that will need to come from your Association.
If you are looking for a Listing Agent for your South of the River Townhome, we would be happy to apply for the job! Just give me a call at 612-889-6496 or send an email to the address listed in the top right hand corner. We look forward to helping you sell your real estate!