How the Improved HOA Functioning Act Affects Apartment Marketability
Since the introduction of the Improved HOA Functioning Act in 2018, HOAs must meet stricter maintenance and financial reserve requirements. What does this mean for selling an apartment?
What does the act entail?
The act aims to improve building maintenance and promote sustainability. Key components include:
- Mandatory Reserves: HOAs must set aside funds annually for maintenance, at least 0.5% of the building’s reconstruction value or as specified by a maintenance plan.
- Financial Transparency: HOAs must provide clear financial records.
Impact on Marketability
- More Certainty for Buyers:
- Buyers gain better insight into the HOA’s financial health and can estimate maintenance costs.
- Challenges with Non-Compliance:
- HOAs lacking reserves or a maintenance plan can hinder sales, as banks may deny mortgages.
- Higher Demand for Sustainable Buildings:
- HOAs investing in sustainability have a competitive edge in the housing market.
What Can Agents Do?
- Review Documents:
- Check whether the HOA complies with legal requirements.
- Inform Buyers:
- Clarify how the HOA’s financial status impacts them.
Practical Tip
Advise sellers to address maintenance issues and reserve requirements before listing the apartment.
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