Sellers and Listing Agents: Are you Sabotaging your Closing by Overlooking HOA Disclosures?

Sellers and Listing Agents: Are you Sabotaging your Closing by Overlooking HOA Disclosures?

It is crucial to be aware of your legal obligations under Section 720.401, Florida Statutes

August 28, 2023

If you are a seller or listing agent involved in the sale of a property within a community governed by a homeowner’s or condo-owner’s association (HOA) in Florida, it is crucial to be aware of your legal obligations under Section 720.401, Florida Statutes. This statute lays out the requirements for sellers to provide comprehensive disclosures about HOA matters to potential buyers before completing a real estate transaction. Failure to comply with these disclosure obligations can lead to serious penalties, as detailed in subsection 1(c) of the statute. In this article, we will touch on the specifics of the statute, highlighting the key elements that sellers and listing agents must be familiar with to avoid legal repercussions.


Section 720.401, Florida Statutes pertains to the disclosure of information related to a seller’s HOA during the sale of residential properties located within these communities. The statute aims to ensure that buyers are fully informed about the rules, financial matters, and operational aspects of the HOA before finalizing a real estate transaction – and for good reason: a Buyer who buys within an HOA will immediately be subject to their requirements, assessments, and even litigation.

Specific Disclosure Requirements

The statute requires the Seller to disclose the following key pieces of information BEFORE executing the contract for sale:

  1. Membership Information: Sellers and listing agents must disclose whether the property in question is a part of an HOA and provide contact information for the association. This includes the name and address of the HOA and the name and contact details of its authorized representative.
  1. Governing Documents: Sellers must furnish a copy of the HOA's governing documents to potential buyers. These documents typically include the Articles of Incorporation, Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, and any applicable Rules and Regulations. These documents outline the rules, regulations, and restrictions that govern life within the community
  1. Financial Statements: Sellers are required to provide potential buyers with copies of the HOA's most recent financial statements. These statements give insight into the association's financial health, including its budget, reserve fund, outstanding debts, and delinquency rates. It is crucial to disclose any ongoing or anticipated special assessments that might impact the buyer's financial obligations as an HOA member.
  1. Pending Legal Actions: Sellers must disclose any pending legal actions or claims involving the HOA. This could include lawsuits, disputes with residents or third parties, or regulatory actions.
  1. Transfer Fees and Special Assessments: Sellers must notify potential buyers of any HOA transfer fees and any special assessments that will be due at the time of closing. Clear disclosure of these costs is essential for buyers to budget effectively and avoid surprises.

What Happens if You Fail to Observe the Requirements

Failure to comply with the disclosure requirements set forth in Florida Statutes 720.401 can have severe consequences. Subsection 1(c) of the statute states that, if the disclosure is not given to the Buyer “before the purchaser executes a contract for the sale of property…the purchaser may void the contract by delivering to the seller or the seller’s agent or representative written notice canceling the contract within 3 days after receipt of the disclosure summary or prior to closing, whichever occurs first.” This means that, if you fail to provide the HOA disclosure, you are automatically giving the Buyer an additional opportunity to walk away from the transaction—right up to 3 days prior to Closing. Talk about an unpleasant surprise!

As a seller or listing agent in Florida, understanding and adhering to the disclosure obligations outlined in Section 720.401, Florida Statutes is of utmost importance. Complying with these requirements ensures that potential buyers have all the necessary information to make informed decisions regarding the property and the associated homeowner association. Failing to fulfill these obligations can result in legal liabilities and potential financial losses. It is advisable to consult with a qualified real estate to ensure full compliance and protect your interests during the sale of a property governed by a homeowner association.

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