The ABCs of Pennsylvania’s 3407 Certificate of Resale Requirement

By on September 28th, 2007

Posted in New Jersey

Statute §3407 of the Pennsylvania Condominium Act (the “Act”) provides that a contract for the resale of a common interest community unit by someone other than the developer is unenforceable unless the unit owner furnishes certain information and documents.  Accordingly, under §3407(17)(a) when requested, the Association must furnish a Certificate containing the information and supplying the documents necessary to enable the unit to comply with his obligations.
Thus, unlike its neighboring state, Pennsylvania requires actual participation by the Association when it comes to the resale of a condominium unit.  However, it is important for an Association to be mindful that such participation should remain limited to the confines of the Act.  Far too often the author of the 3407 Certificate, acting on behalf of the Association, subjects the Association to undue liability by making statements that go beyond its responsibility pursuant to the Act.
For example, the Act requires the Association to verify the amount of any unpaid monthly maintenance fees, HOA fees, condo fees or special assessments currently due from the selling owner.  Mindful of the limiting language of currently due, the Association should be wary not to include information on the Certificate with regard to the possibility of a future increase in the monthly maintenance fee or a future special assessment.  While it may seem at the time as a good faith gesture, in the end it only creates confusion amongst the seller and buyer as to whom shall be responsible for payment in the case that such possibility becomes a reality.
Moreover, an Association should avoid making certain ultra vires statements such as “the Association will not increase its common monthly assessment” or “the Association will not issue a special assessment for the next six months”.  Again, while the Association may truly have no intention of having to break such a “promise”, the Association cannot subject itself to the possibility of allowing such an over-reaching statement to prevent it from raising emergency funds when needed.
Thus, with the above advice in mind we strongly encourage Associations to review their current 3407 policy and assure not only compliance but that same does not create undue liability for the Association or confusion amongst the parties.

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