MD home sellers and HOA docs

MD home sellers – be aware of your obligation to provide HOA or condo docs.

townhomesAs time passes, real estate contracts become increasingly lengthy. Both home sellers and buyers are incredulous when they first encounter the many pages of a home sale contract. To put it in perspective for them, I often retell the stories that I have been told about how a time in the past real estate transactions were conducted with one or two page contracts, and sometimes even on just a handshake. To offer some solace to the seller/buyer, I assure them that there is importance to the seemingly endless number of notices and clauses; many notices are reminders to the seller and buyer about their obligations in the transaction.

A good example of the need for such notices is the seller’s obligation to provide the buyer with HOA/condo information and docs. In the past, this obligation was often taken lightly; sellers would often dig out the association rules which they were given when they purchased the home, dust them off and give them to the home buyer; with little expectation that the information would be reviewed.

Unfortunately, this practice is still occasionally being attempted by unknowing sellers and their agents. Several years ago, an agent asserted that an ancient looking manila envelope (that was stained because it was most likely used as a coaster and trivet) that the seller received when they purchased the home fulfilled their obligation to the buyer, even though the information was out of date and incomplete.

Providing up to date and complete documents to the home buyer allows the buyer not only to review the association rules, but also makes them aware of the financial and legal standing of the association.

As a home seller, it’s important for you to understand the need to fulfill your obligation with regard to providing HOA/condo association information, and to do it quickly. The buyer may “cancel” (void) the contract if they do not receive all the required information; and the buyer has a review period (five days to review HOA docs, and seven days to review condo docs), during which they may “cancel” (void) the contract.

Most resale packages that are obtained from HOA/condo associations contain all the documents required, however, it’s still up to you the seller to ensure all the required documents are enclosed in the package. To be more specific, local HOA/condo real estate disclosure forms were recently changed for clarity; including asking the seller to list fees, assessments, association contacts, and other information.

Home buyers are informed consumers; many are aware they are required to receive specific information about the HOA/condo from the home seller. And although the review period for the HOA/condo docs may have been abused by home buyers in the past, during the hectic sellers market when the review period was used as an “out” from making offers on multiple properties; today, home buyers take the review period seriously and many read the docs. You might even get a question or two about the bylaws/rules from an astute home buyer.

If you’re planning a sale of your home that is located within a homeowners association or a condo, you’re obligated to provide the home buyer specific information about your association. Besides your listing agent, who can guide you through the requirements and your obligations; your HOA/condo association and its management company are helpful sources to obtain the necessary information.

Original published at https://dankrell.com/blog/2012/10/25/md-home-sellers-and-hoa-docs/

by Dan Krell

This article is not intended to provide nor should it be relied upon for legal and financial advice.  Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

Understanding property tax assessments in Montgomery County MD

It’s the time of year when property tax bills are issued to home owners. And understanding property tax assessments can be confusing. A common question among home owners and home buyers is, “how are property taxes calculated, and what is the money used for?”

Understanding property tax assessments

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Information about property assessments and taxation is conveniently posted on the internet by the Maryland Department of Taxation and Assessments (www.dat.state.md.us) and the Montgomery County Department of Finance (www.montgomerycountymd.gov). There are two factors that determine your property tax bill, the property assessment and the property tax rate.

According to the Maryland Department of Taxation and Assessments (MDTA), “Properties are reassessed once every three years and property owners are notified of any change in their assessment. Assessments are certified by the Department to local governments where they are converted into property tax bills by applying the appropriate property tax rates.”

Because Maryland does not impose any restrictions or limitations, property tax rates vary throughout the State. This means that counties and cities are free to set the rates needed to fund government services. According to the Montgomery County Department of Finance, “The real property tax rate, which is set each year by the County Council, is an ad valorem tax, meaning it is applied to the assessed value of the property. The fully phased-in assessed value equals the full cash value of the property…”

The total tax rate is a combination of the State, county, and (for some home owners) municipal tax rates. The rate is typically expressed in dollar amount per $100 of assessment; the MDTA gives this example to understand how property tax rates are expressed, “for a property with a fair market value of $100,000 the property taxes would be calculated by dividing the assessment by 100 and multiplying the product by the property tax rate. Using an overall tax rate of $1.08 per $100 for this example ($1.00 local property tax plus $.08 state property tax), the amount of property taxes due would be calculated: $100,000 divided by 100 times $1.08 or $1,080.00.”

The MDTA explains, “The property tax is primarily a local government revenue. Counties and cities depend on the property tax and a portion of the income tax to make up their budgets.” Montgomery County levies a general tax to fund basic services, such as police, elementary and secondary education, the community college, transportation, health and social services, and libraries. Additional county taxes are levied to fund public transportation, fire and rescue services, and acquisitions by the Maryland-National Capital Park and Planning Commission. Seven additional county taxes are also levied on residents in “specially defined areas.”

If you disagree with your property assessment, you can appeal it by following the instructions provided by the MDTA. The assessment notice has an appeal form, which must be filed within 45 days of the date on the notice (a home buyer has 60 days from the date of property transfer to appeal the property tax by submitting an appeal of the property value, but only if the transfer of the property occurs after January 1st and before the next taxable year).

Know your rights throughout the property assessment and appeal process; SDAT provides  “Property Owner’s Bill of Rights”   (https://dat.maryland.gov/realproperty/Pages/Bill-of-Rights.aspx) to summarize sections of the Tax-Property Article which deal with appeals, assessment notification, and public information.

Original published at https://dankrell.com/blog/2012/06/13/understanding-property-tax-assessments-in-montgomery-county-md/

By Dan Krell
Copyright © 2012

This article is not intended to provide nor should it be relied upon for legal and financial advice.  Using this article without permission is a violation of copyright laws.

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