5407, Homeowners Association Certification
3407, Condominium Association

When listing a property that is part of a planned community subject to a Homeowners Association the Seller will be required to provide what is known as a 5407 or 3407 Certificate.  This Certificate is so named because of the section of the Pennsylvania Uniform Planned Community Act. Section 5407 addresses homeowners Associations and 3407 addresses Condominium Associations. The Certificate is provided by the Association after receipt of a request by a Unit Owner. Under this law the Association shall furnish the certificate containing the information and copies of documents necessary to enable the unit owner to comply with this section within 10 days of receipt.

This section protects Buyers by insuring that all information regarding the standing and obligations of the Homeowners Association is provided before the sale. The intent is to allow potential buyers to make informed decisions regarding their purchase of property. A Buyer who has the opportunity to review a 5407 Certificate may choose not to purchase where the certificate reveals a high monthly or annual payment or an Association with significant liabilities. This section also protects the Buyer by precluding liability for any unpaid assessment or fee greater than the amount set forth in the certificate prepared by the Association.

This section also protects the Seller from an Association that fails to produce any information.  Where the Seller makes a timely request to the association, Seller will not be liable for the failure or delay of the association to provide the certificate in a timely manner. In addition the Seller will not be liable for any erroneous information provided by the association and included in the Certificate. 
  
The purchase contract is voidable by the Buyer until the Certificate is provided and for five days thereafter or until conveyance, whichever occurs first. 

The substantive requirements of what an Association must provide pursuant to a Section 5407 request includes the plat and plans, bylaws of the association, rules and regulations of the association a certificate containing;

1. A statement disclosing any right of first refusal or other restraint on the free alienability of the unit.
2. A statement setting forth the amount of monthly common expense assessment and any unpaid assessment currently due and payable from the selling unit owner.
3. A statement of any other fees payable by unit owners.
4. A statement of any capital expenditures by the association for the current and two next succeeding years.
5. A statement of the amount of any reserves for capital expenditures and of any portions of those reserves designated by the association for any specified project.
6. The most recent regularly prepared balance sheet and income and expense statement, if any for the association.
7. The current operating budget of the association.
8. Statement of any judgments against the association and the status of any pending lawsuits against the association.
9. A statement describing any insurance coverage provided for the benefit of the unit owners.
10. A statement as to whether the executive board has knowledge that any alterations or improvements to the unit or to the limited common elements assigned thereto violate any provision of the declaration
11. A statement as to whether the Executive Board has knowledge of any violations of applicable governmental requirements or knowledge of the existence of any hazardous conditions pursuant to section 5402(a) (27) (relating to public offering statements; general provision) with respect to the unit, the limited common elements assigned to the unit or any portion or any other portion of the planned community.
12. A statement of the remaining term of any leasehold estate affecting the planned community and the provisions governing any extension or renewal thereof.
13. A statement as to whether the declaration provides for cumulative voting or class voting.
14. A statement as to whether an agreement to terminate the planned community has been submitted to the unit owners for approval and remains outstanding.
15. A statement of whether the planned community is a master association or is part of a master association or could become a master association or part of a master association.
16. A statement describing which units, if any, may be owned in time-share estates that may be created in the planned community.
17. A statement of whether the declarant retains the special declarant right to cause a merger or consolidation of the planned community and, if so, the information describing such right which was supplied by the declaration pursuant to section 5205 (13) (relating to contents of declaration; all planned communities) if any.

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