How long does a buyer have to terminate the purchase contract after receiving the POA packet by hand delivery or electronically (receipt obtained)? Three days or 72 hours?
The buyer has three days and the difference is important. Example: Assume delivery to buyer at noon on Monday. If the deadline is 72 hours, the buyer must act by noon on Thursday (72 hours later). If the deadline is three days, the buyer must act by 11:59 p.m. on Thursday (which is the end of the third day).
Does delivery of a property owner’s association packet (POA) to the buyer agent amount to delivery to the buyer?
Yes, Agents have the authority to accept documents that are routine to the transaction on behalf of their clients. The heart of agency is that the actions of the agent taken within the scope of the agent’s authority are binding on the client.
However, if the client withdraws or withholds its authority from the agent to receive a certain document on the client’s behalf, and this is communicated to the other side, then that notice is effective, and the delivery would have to be made to the client. Why? Because an act performed outside the scope of authority is not effective to bind the client.
The POA Act also states that the packet may be delivered to the purchaser or “any person designated by such purchaser in a ratified real estate contract for purchase and sale of residential real property or other writing designating such agent.” 55-509.4(G).
The seller requested that my buyer client waive his right to receive a POA packet. Is that legal? Also, can the POA termination period be extended?
Buyers may not waive their rights under the Act, even by written agreement of all parties. The POA Act (§ 55-509.4(F)) sets forth the buyer’s rights under the law —disclosure of the fact the property is in a development governed by the Act, termination rights upon receipt of the packet, the effect of settlement on the exercise of buyer’s rights, etc. — and subsection F provides as follows:
“Except as expressly provided in this chapter, the provisions of this section and § 55-509.5 may not be varied by agreement, and the rights conferred by this section and § 55-509.5 may not be waived.”
Therefore, the termination period may not be extended in the contract.
The buyer is terminating the contract based on the POA packet but she really just wants out because she got cold feet. Can she do that?
Her reasoning does not matter; she has an absolute right to terminate at any time during the termination period.
If the buyer receives an incomplete or insufficient POA packet, does the termination period start?
If what was given was called the packet or if it was clear that was all that was going to be given, the termination period started then. There have been several circuit court decisions stating that the packet does not need to be complete to start the clock. Otherwise, we might never have resolution.
Furthermore, the statute makes clear that just telling the buyer that no packet will be available starts the clock as well. So an incomplete packet does the same.
I think it’s worth asking, when you get the incomplete packet, whether what is given is intended to be the entire packet. If it is, the clock starts running. Of course, the buyer can pull the plug if what is given is unsatisfactory.
The property I’m listing has more than one community association. What are the fees in that case?
The Code of Virginia specifically mentions this scenario. Each association may charge the fees allowed under the law, with the provision that no CIC-managed association shall charge inspection fees unless it has architectural control over the lot. If the association does not have architectural control, it may only charge those fees related to the preparation and delivery of the packet or certificate.
A new 2016 law provides that if the lot is governed by more than one association, the purchaser’s right of cancellation may be exercised within the required time frames following delivery of the last disclosure packet or resale certificate.
Do property owners’ association (POA) packets, condominium resale certificates, lead-based paint disclosures, and Residential Property Disclosure Statements have to be provided for both foreclosures and REO properties?
If a property is sold at foreclosure, none of these disclosures are required.
If the property is REO (where the bank has taken the property back in foreclosure or by deed in lieu and is now selling it), the following disclosures are required:
- POA packet/condominium resale certificate
- Lead-based paint disclosure for properties built prior to 1978
In either case, the Residential Property Disclosure Statement is not required.
A common scenario we see: my buyer client received the Property Owner’s Association (POA) packet and wants out. Therefore, we sent the seller a signed release of contract requesting a release within three days of receiving the packet. Now the seller says he won’t sign the release and is proceeding to settlement. What gives?
Your buyer may still be obligated under the contract. The POA Act provides a termination right within a specified number of days, but you didn’t terminate – you asked for a release. A termination and release are very different things.
Termination is generally the unilateral act of one party declaring the contract at an end. For example, the buyer terminates upon being refused a loan or because the seller refuses to make agreed-upon repairs. A termination of this sort does not rely upon the agreement of the other party. Please also keep in mind that termination may work to end the contract, but it does not release the parties from liability (e.g. they may still sue each other if one party feels the other party defaulted on the contract).
A release is a mutual act of the parties by which one or more of the parties are released from obligations under the contract pursuant to whatever agreements the parties have reached. For example, Firm A can release sellers from a listing and sellers agree to pay Firm A’s advertising expenses. Or sellers can release buyers if buyers forfeit the deposit. Remember, both buyer and seller must sign the release for it to be effective.
The point to remember here is that just sending a release to the other side does not usually constitute the act of termination. If your client wants to terminate, do so unambiguously. Virginia REALTORS® offers a Notice of Termination of Contract (Form 660) for download on our website. And if you send a termination notice, it is a good idea to send a release as well.
Are there any new POA/Condo laws taking effect in 2016:
Both the Property Owners’ Association Act and the Condominium Acts were amended. Many of the amendments were to mirror provisions of the two statutes, such as mirroring the POA to the COA in regards to a buyer being able to get out of a contract when the disclosure package is not available. The law now clearly defines who the purchasers’ and sellers’ designated agents are for the purpose of delivering the disclosure packet; that delivery must be made to the party or agent, not someone else in their office, unless agreed to in the contract; and that for properties with more than one association, the deadline to terminate a contract does not start running until the last set of documents or certificates is delivered. Additionally, the law increases the timeframe in which associations can back-charge sellers for the cost of packets from 45-days to 60-days, to satisfy concerns regarding delayed closings due to TRID.
Other provisions in the law deal with rentals in common interest communities. There are further limitations on the fees that POA’s and COA’s can charge to renters or owners who want to rent their property; a prohibition on associations evicting tenants; and the law now requires POA’s and COA’s to recognize the agency relationship between an owner and a real estate licensee when provided with written documentation of the relationship. POA’s and COA’s were requiring owners to provide a formal power of attorney designating a real estate licensee as their agent; under the new law, any written authorization is all that can be required.