What is a Texas HOA resale certificate, and what should condo buyers look for? The HOA resale certificate is a legally required disclosure document that tells you the financial and legal health of the homeowners association before you buy. In Texas, condo buyers have seven days after receiving it to cancel the contract with no penalty. Most buyers rush past it. Here's what's actually in it, what can kill your closing, and why your agent should walk through it with you line by line.
By Matt Watson, Broker, REALTOR® | June 3, 2026
If you're buying a condo or townhome in Uptown, Oak Lawn, or anywhere in Dallas's urban core, you're going to receive a document called the HOA resale certificate. Most buyers set it aside without reading it. That's a mistake.
The resale certificate isn't just paperwork. It's a financial snapshot of the association you're about to join, and it contains information that can affect your monthly costs, your lender's willingness to fund the loan, and your ability to walk away without losing your earnest money.
Here's what you need to know before you sign anything.
What the HOA Resale Certificate Is
Texas Property Code Section 207.003 governs resale certificates for most residential subdivisions and townhome communities. For condominiums specifically, Section 82.157 controls the requirement.
The title company orders the certificate on behalf of the seller, typically after the contract is executed. The association or its management company must deliver it within 10 business days of the order being placed. The seller pays to order it in many cases, but Texas law allows the cost, capped at $375, to be allocated to the buyer unless the contract specifies otherwise.
What's inside:
- Current dues: the amount you'll pay monthly or annually, and how often the board can adjust them
- Special assessments: any one-time charges the association has levied or approved, including any upcoming assessments that haven't started yet
- Budget and reserve fund balance: the operating budget and how much money the association has set aside for future repairs
- Delinquency rate: the percentage of owners who are behind on dues
- Pending litigation: any active or pending lawsuits involving the association
- Violations on the unit: any open compliance violations or fines tied to the specific unit you're buying
The document also includes the declaration, bylaws, and any association rules. All of it matters.
Your Seven-Day Right to Cancel
This is the part most buyers don't know about.
For condominiums governed by the Texas Uniform Condominium Act (Chapter 82), you have the right to terminate the contract within seven days of receiving the resale certificate. That's a clean exit, no penalty, full refund of any payments made. The cancellation must be in writing, delivered by hand or certified mail.
That seven-day window is independent of your option period. It runs on its own clock from the date you receive the document, regardless of where you are in the transaction. If the resale certificate arrives after your option period has already expired, you still have seven days to review it and terminate if needed.
For townhome communities and traditional subdivisions under Chapter 207, the cancellation framework is different and depends on your contract terms, so this is worth confirming with your agent.
What Can Actually Stop Your Closing
Here's where buyers lose money because they didn't read closely.
Pending Litigation
If the association is in an active lawsuit, your lender may classify the building as non-warrantable. That means conventional financing through Fannie Mae or Freddie Mac could be off the table, and you'd need a portfolio loan or non-QM product at a higher rate. Some lenders won't touch a building in litigation at all. If you're planning on conventional financing, check this first.
Open Violations on the Unit
Unpaid fines and unresolved violations tied to the unit don't necessarily go away at closing. In some cases, the title company can't issue the required endorsements to satisfy the lender when violations are outstanding. That can delay or derail the closing entirely. The seller needs to resolve violations before the transaction closes, and your contract should address this.
Unpaid Dues and Assessments
In Texas, unpaid HOA dues and special assessments generally stay with the property, not with the seller. If the previous owner was delinquent, you could be walking into that balance. The resale certificate tells you whether there's an outstanding balance, and your purchase contract should require the seller to bring the account current before closing.
Thin Reserves
A reserve fund that looks anemic means the association may not have enough set aside to cover major repairs without levying a special assessment. New roof, elevator replacement, parking garage resurfacing: these are expensive. If you buy in a building with depleted reserves, you may get hit with a five-figure special assessment within a year or two of closing.
High Delinquency Rate
If more than 15 to 20 percent of owners are behind on dues, that's a red flag for lenders and a red flag for the financial health of the building overall. A building where a significant portion of owners can't pay their dues is a building where the association is spending on collections and running with less revenue than it budgeted.
What Your Agent Should Be Doing
The resale certificate is ordered by the title company on behalf of the seller, typically after the contract is executed. Your buyer's agent should be tracking when it was ordered, when it was received, and making sure you have enough time to review it before that seven-day window closes. Because the timeline runs independently of the option period, it requires its own attention.
When I'm working with buyers on a condo or townhome in Uptown or Oak Lawn, I track the receipt date and make sure we sit down to go through it well before the seven-day deadline. We look at the reserves, the litigation status, the current violations, and any upcoming assessments. If something looks off, we either negotiate with the seller or we walk.
It takes about 30 minutes to review it properly. That 30 minutes has saved more than a few of my clients from expensive surprises.
The resale certificate is also connected to whether the building qualifies for conventional financing. If you want to understand how lender approval works for condos in Dallas, my post on warrantable vs. non-warrantable condos walks through how Fannie Mae and Freddie Mac evaluate condo projects, and why litigation and delinquency rates matter beyond just the resale certificate.
For context on your overall closing budget, including what else you'll be paying at the table, see how to navigate HOA fees when buying a condo in Uptown Dallas.
The Bottom Line
The HOA resale certificate is not a formality. It's one of the most important documents in a condo or townhome transaction, and you have a legal right to cancel based on what's in it.
Track when you receive it and review it within that seven-day window. Have your agent walk through it with you. Pay particular attention to pending litigation, unpaid balances, reserve health, and any open violations on the unit you're buying. And remember: that clock runs on its own timeline, separate from your option period.
If you're looking at a condo or townhome in Dallas's urban core and you want someone who knows how to review these documents and protect your position, I'd be glad to help. Reach out at mattwatson.com and we can set up a free consultation to talk through what you're seeing.
Frequently Asked Questions
Who pays for the HOA resale certificate in Texas?
Texas law caps the fee at $375. Who pays depends on your contract. In many transactions, the seller pays since they're the one required to provide it. But the contract can allocate the cost to the buyer, and in some communities the management company charges the buyer directly. Check your contract language before closing.
What is the seven-day cancellation period for Texas condo buyers?
Under Texas Property Code Section 82.157, if you're buying a condominium, you have the right to terminate the contract within seven days of receiving the resale certificate. The cancellation must be in writing and delivered by hand or certified mail. You get a full refund with no penalty. This window runs independently of your option period, so you need to track it on its own timeline.
Can unpaid HOA dues transfer to the new buyer in Texas?
Yes. In Texas, unpaid HOA dues and fines generally stay with the property, not with the seller. If the previous owner had an outstanding balance, that balance can follow the property to you. The resale certificate will disclose any unpaid amounts, and your purchase contract should require the seller to bring the account current before or at closing.
Does HOA litigation affect a condo's financing?
Yes, often significantly. Lenders following Fannie Mae and Freddie Mac guidelines review condo projects for active litigation. A building involved in a significant lawsuit may be classified as non-warrantable, which means conventional financing is unavailable. You'd need a portfolio loan or non-QM mortgage, which typically carries a higher interest rate and stricter qualifying requirements.
What should I look for in a condo's reserve fund?
Look at the reserve fund balance relative to the building's age and anticipated maintenance needs. A well-funded reserve typically covers 70 percent or more of anticipated repair costs. A depleted reserve in an older building is a signal that a special assessment may be coming. If the reserves look thin and the building is more than 15 to 20 years old, ask the association for a reserve study or get a clearer picture of upcoming capital projects before you close.
About Matt Watson, Broker, REALTOR®
Matt Watson is a Dallas-based real estate broker and REALTOR® with over 25 years of experience in the city's urban core neighborhoods. He specializes in condos, townhomes, and single-family homes in Uptown, Oak Lawn, East Dallas, and North Oak Cliff. Whether you're buying your first condo or selling a longtime home, Matt brings deep local knowledge and straightforward guidance to every transaction. Connect with Matt at mattwatson.com.
