If you're buying a home in an HOA community in Texas, the seller is legally required to provide you with a Resale Certificate before closing. Most buyers look at the monthly dues, scan the restrictions, and call it done. But the resale certificate contains information that can materially affect the home's value, your lifestyle, and your finances — and you have a legal right to cancel if you don't like what you find.
What Is a Texas HOA Resale Certificate?
Under Texas Property Code §207.003, an HOA must provide a resale certificate to a seller within 10 days of a request. The seller is responsible for ordering and paying for it, though the fee is typically passed to the buyer at closing — usually $150–$400. The certificate must be current within 90 days of the closing date, so timing matters if your transaction runs long. Your buyer's agent should confirm the certificate is on order early in the contract period, not the week before closing.
The resale certificate is not the same as the HOA's governing documents (CC&Rs, bylaws, rules). Those are separate — and you should request those too — but the resale certificate is the snapshot of current financial and legal status. Think of it as the HOA's version of a seller's disclosure.
What the Resale Certificate Must Contain
By law, the certificate must include a specific set of disclosures. Under §207.003, that includes:
- Current monthly dues and any recent or upcoming special assessments
- The HOA's current budget, reserve fund balance, and income/expense statement
- Outstanding violations against the property being sold
- Pending litigation involving the HOA
- Rental restrictions — maximum number of rentals allowed, short-term rental rules
- Insurance coverage maintained by the HOA
- Any deed restriction violations the HOA is aware of on the specific property
- Amendment or rule changes voted in since the last disclosure
Each of these carries real financial and legal weight. A missing or incomplete resale certificate is not a technicality — it is a gap in your ability to make an informed purchase decision.
Red Flags in an HOA Resale Certificate
Most resale certificates won't contain anything alarming. But when they do, buyers are glad they looked. Watch for these specific issues:
Reserve fund below 10% of the annual budget. A depleted reserve fund means the HOA may not have the capital to cover major repairs — roof replacement, parking lot resurfacing, pool equipment — without issuing a special assessment to every owner.
Pending litigation. HOAs involved in lawsuits often freeze discretionary spending, struggle to obtain or renew insurance coverage, and can create complications for buyers seeking financing. Ask what the litigation involves and how long it has been pending.
Special assessments in the pipeline. An undisclosed upcoming assessment of $2,000–$5,000 per unit is a material cost that changes the economics of your purchase. Confirm whether any are pending, voted but not yet collected, or under discussion.
Rental restrictions with a cap already met. Some DFW HOAs limit rentals to 15–25% of total units. If that cap is met, you cannot lease the property until another unit converts back to owner-occupancy. This directly affects your exit strategy if your plans change.
Violations on the property. Existing violations do not disappear at closing — they transfer with ownership. If the seller has an open violation for an unpermitted structure or landscaping non-compliance, that becomes your problem unless it is cured before closing or addressed in the contract.
How to Evaluate the HOA's Financial Health
The resale certificate gives you the starting point. To go deeper, ask for the full reserve study (the certificate should include or reference it). A reserve study projects the cost of future major repairs and whether the HOA is funded to meet them. Compare the reserve balance to those projected costs — a well-funded HOA is typically at 70% or better.
Also look at the delinquency rate. A high percentage of owners behind on dues signals financial stress throughout the community, which puts additional pressure on the HOA's budget and increases the likelihood of a special assessment.
Review the HOA's insurance coverage carefully. Understand whether the master policy covers the exterior of your specific unit or only common areas. The distinction between a "walls-out" policy (HOA covers the building shell) and a "bare walls" policy (HOA covers only the studs and out, leaving interior systems to you) significantly affects what your individual homeowner's policy needs to cover.
What to Do If You Find a Problem
If the resale certificate reveals something concerning, you have options — but you need to act within your review window.
First, terminate during your 5-day statutory window if the issue is material enough to walk away. This is the cleanest exit with full earnest money recovery.
Second, negotiate with the seller to cure existing violations before closing, or to escrow funds to cover a pending special assessment. Sellers are motivated to close; they may agree to remediate an issue they thought a buyer wouldn't notice.
Third, request a price reduction or closing cost credit to offset a financial liability you're assuming. A $4,000 pending assessment is a real number that can be factored into the offer.
Fourth, contact the HOA management company in writing for clarification on anything ambiguous in the certificate. Get responses in writing and keep them as part of your closing file.
Do not ignore a concern and hope it resolves itself. HOA issues — violations, assessments, litigation — follow the property, not the seller.
The resale certificate is one of the most important documents in a Texas HOA purchase, and one of the least-read. Take your 5-day review period seriously, loop in your buyer's agent and lender early, and treat the certificate as the due diligence tool it was designed to be — not a formality to initial and file away.