Selling a home in an HOA or co-op: What you need to know

Selling a home within a homeowners association (HOA) or a housing cooperative (co-op) differs significantly from selling a traditional single-family home. The process involves unique rules, approvals, and financial considerations that vary depending on the association’s structure and governing documents.

In an HOA, homeowners own their properties outright, while the association manages shared spaces and enforces community rules. Selling an HOA property generally follows a standard real estate process but may include transfer fees, resale disclosures, and approval requirements from the association.

In a co-op, you don’t own real estate directly but rather shares in a corporation that owns the building. Selling a co-op means transferring those shares to a new buyer, often requiring board approval, a financial review, and an interview process.

Understanding your association’s rules, financial obligations, and approval process before listing your home is crucial to a smooth sale.

The process of selling a home in an HOA or co-op

Understanding your association’s selling rules

Before listing your property, review your HOA’s Covenants, Conditions, and Restrictions (CC&Rs) or your co-op’s bylaws and proprietary lease. These documents outline any restrictions on selling, required disclosures, and whether board approval is needed.

For instance, some HOAs enforce a “right of first refusal”, allowing the association to match any buyer’s offer before the sale proceeds. Co-ops often have strict financial requirements for buyers, and a rejected applicant means the seller must restart the process.

In the U.S., the Federal Housing Administration (FHA) and Department of Housing and Urban Development (HUD) regulate aspects of HOAs and co-ops, particularly regarding mortgage eligibility and fair housing laws. If your property is in an FHA-approved co-op, financing options may be broader, making it easier to attract buyers.

Pricing your property correctly

Determining the right price for your home requires more than just looking at market trends. In an HOA, pricing follows market-based appraisals, while co-ops often have board-imposed pricing restrictions based on financial assessments.

For co-op owners, pricing is usually based on:

• The co-op’s valuation method (e.g., book value vs. market-based pricing)
• Any shareholder-approved caps on resale price
• The appraised value of the unit and any improvements

HOA sellers, on the other hand, should consider:

• Recent sales of similar homes within the community
• The HOA’s financial health and upcoming assessments
• HOA transfer fees or capital contributions required from buyers

If your home is in an age-restricted HOA (such as a 55+ community), additional pricing factors may include resale limitations based on community demand and financing options for senior buyers.

Preparing your home for sale

To attract buyers, your property should be in excellent condition and comply with association rules regarding maintenance and modifications.

Start by gathering necessary documents, such as:

• Financial statements and meeting minutes from the HOA or co-op
• Rules and regulations, including pet policies, leasing restrictions, and special assessments
• Disclosure documents, required by law in some states (e.g., California mandates HOA sellers provide buyers with specific disclosures about fees and rules)

You may also need a pre-sale inspection to identify any outstanding violations. Some HOAs issue an estoppel certificate, which confirms whether the seller owes any unpaid fees before the sale can proceed.

The selling process

Once your home is listed and you find a buyer, the transaction follows several steps:

Step 1: Buyer approval process (especially in co-ops)

Co-ops require buyers to submit an application, undergo a financial review, and attend a board interview before final approval. The board assesses whether the buyer meets the financial stability requirements and aligns with the community’s standards.

HOAs generally don’t require board interviews, but they may impose background checks or rental restrictions on buyers. Some high-end HOAs in gated communities even require new resident orientation sessions before move-in.

Step 2: Disclosure and legal requirements

In states like Florida and New York, HOA and co-op sellers must provide buyers with a resale certificate, detailing:

• Monthly fees and assessments
• The association’s financial reserves
• Any pending lawsuits involving the HOA or co-op

Failure to disclose this information can invalidate a sale or lead to legal disputes later.

Step 3: The closing process

Once the buyer is approved and financing is secured, finalizing the sale involves:

• Signing a purchase agreement, reviewed by both parties’ attorneys
• Paying any required HOA or co-op transfer fees
• Obtaining board approval or final clearance from the association

At closing, the property deed (for HOAs) or stock certificates (for co-ops) are legally transferred to the new owner.

Taxes and financial considerations

In the U.S., selling a primary residence may qualify for capital gains tax exemptions under IRS rules. The $250,000 (single) / $500,000 (married) tax exclusion applies if you’ve lived in the home for at least two of the past five years.

However, co-op sales can involve stock sale taxes, and some states impose transfer taxes or mansion taxes on high-value sales. New York, for instance, levies a 1% “mansion tax” on sales exceeding $1 million.

If your HOA or co-op imposes flip taxes (resale fees), these should be factored into your net proceeds. Some co-ops charge up to 3% of the sale price, which can significantly impact the seller’s final payout.

Selling with or without a real estate agent

Using an agent

An experienced real estate agent can:

• Market your home effectively
• Navigate HOA or co-op board approvals
• Handle complex negotiations and paperwork

Agents familiar with co-op and HOA sales streamline the process, reducing the risk of application denials or legal issues.

For Sale By Owner (FSBO) considerations

Selling independently is possible but requires handling:

• Buyer screening and board applications
• Marketing through online platforms (e.g., Zillow, Realtor.com)
• Legal contract drafting and closing procedures

FSBO sales work best in HOAs with minimal restrictions. In strict co-ops, going without an agent may lead to delays or rejected applications if the board isn’t satisfied with the paperwork.

Final thoughts: Making your sale smooth

Selling a home in an HOA or co-op comes with unique challenges, but thorough preparation and knowledge of your association’s rules can prevent delays and unexpected costs.

If you’re planning to sell, take these steps:

1. Review your governing documents to understand any sale restrictions.
2. Gather all necessary disclosure forms before listing your home.
3. Consult a real estate professional if your community has complex approval processes.
4. Prepare for potential taxes and fees, including transfer taxes and assessments.

Selling in a community with strict governance requires patience, but with proper documentation and communication, your transaction can proceed smoothly.