Selling a furnished condo in Orange Beach is two sales stacked on top of each other: the real property, and everything inside it.

Add forward bookings, a management agreement and a lodging tax account, and the transaction has moving parts a plain condo sale does not.

Here are nine questions to settle before the listing goes live, with the Alabama rules that decide several of them.

The nine questions, in short:

1. What conveys and what does not
2. Who writes the furniture inventory
3. Pricing the contents separately
4. Where forward bookings land
5. Lodging tax across the closing
6. What the management agreement says
7. What city zoning permits
8. The resale documents clock
9. Withholding for an out-of-state seller

1. What actually conveys with the condo, and what needs a bill of sale?

A deed transfers real property. Furniture, linens, kitchen equipment and electronics are personal property, and they move on a bill of sale instead. In a furnished Orange Beach sale both documents exist, and the contract has to say which items belong in which. Anything left off either one becomes the thing both sides argue about on moving day.

A strong listing goes out with a signed inventory attached and a one line statement of what does not convey. Name the exceptions by room: the painting in the hallway, the grandfather's chair, the two kayaks. Then have the bill of sale drafted alongside the contract.

Furnished as shown is not a document. It is a phrase that holds until the buyer walks through the week before closing and the sectional is gone. If an item is leaving, say so in writing before an offer, not after.

2. Who writes the furniture inventory, and when does it get attached?

The seller writes it, before the unit is listed. A usable inventory lists items room by room with counts and condition, not a paragraph saying fully furnished. It should also mark anything owned by a rental program rather than by the owner. Photographs dated the same week make the list enforceable rather than aspirational.

Walk the unit with the list in hand and photograph each room from the doorway. Orange Beach realtors who sell in rental buildings will ask the management company for its own asset list, because the program usually keeps one for linens and small appliances.

An inventory written after the contract is signed turns into a negotiation. So does one that says items such as, because that phrase invites a buyer to add to it. Count everything once and date the list.

3. How do we price the furniture without creating an appraisal problem?

A lender's appraisal values the real property. Furniture is not real property, so a price inflated by the contents can come back short even when the buyer is happy to pay it. The usual fix is to state a reasonable allocation for the personal property in the contract and on the bill of sale, with the real property price standing on comparable sales.

Ask the listing agent to price the unit against comparable sales first, then treat the contents as a separate line. Ask the accountant how the allocation affects the seller's own return, because depreciated rental furniture does not come out the same way the condo does.

Loading the furniture value into the sale price to make the number look stronger is the mistake that surfaces at the appraisal. It also moves tax consequences around in ways the seller may not have chosen. Pricing games get found in underwriting.

4. What happens to the reservations already on the books?

Forward bookings are the normal case in Orange Beach, and the contract has to decide them. Either the reservations transfer to the buyer with the deposits held against them, or the seller cancels and refunds. Transferring is usually better, because the buyer gets revenue and the guest keeps the trip, but only if the money moves with the booking.

Produce a booking report as of the contract date: arrival, departure, nightly rate, deposit, and who holds it. In Orange Beach and Gulf Shores, where Heather Loper & Associates works, a management company can export that in a day. Attach it to the contract and reconcile at closing.

Assuming the management company will sort it out later is how a guest arrives at a unit without keys. Deposits in a program account are not automatically the buyer's, and a seller who has spent them creates a problem at the settlement table.

5. Who remits the lodging tax on a stay that straddles the closing date?

Somebody does, and the contract should name who. Alabama's state lodgings tax runs 4 percent in Baldwin County, and counties and cities add their own lodgings taxes on top, ranging between 1 percent and 13 percent statewide. In Orange Beach the published total is 16 percent: 10 percent city, 4 percent state and 2 percent Baldwin County lodging tax. The stay dates decide who collects and who remits.

Ask the closing attorney to prorate advance rents and the tax on them as its own line on the settlement statement. Ask the management company which filings it makes for the owner and which the owner files directly.

A seller who closes mid-month and forgets the tax account can still be the registered remitter on a stay that happens after closing. Closing the account too early is the mirror image. Name a date and tell the city and the state.

6. What does the rental management agreement say about a sale?

Read it before the listing, because it usually carries a term, a notice period and a clause about transfer. Some agreements stay with the unit until notice is given. Some claim a commission on bookings already taken even after a sale. The agreement also says who owns the linens, the keys, the lockbox and the listing photographs.

Pull the signed agreement and every addendum, then write down the notice date that would clear it by the target closing. Ask the program in writing to confirm whether a new owner can keep the same agreement or has to sign a new one.

A verbal assurance from a program representative is not the agreement. The clause that catches sellers is automatic renewal, because it can push the notice date past closing and leave the buyer bound to a program they did not choose.

7. Does the next owner have to keep renting it, and what does the city allow?

Rental authority sits with the city and with the building's own documents. Orange Beach Ordinances 2018-1282 and 2018-1283 govern vacation rentals in the RS-1, RS-2, RS-3 and MHS residential districts, and define one as a one or two family dwelling rented for fourteen consecutive days or less. A condominium is neither, so a condo's limits come from the declaration and the association rules.

For a house or duplex, confirm the zoning district with the city. For a condo, the useful proof is the recorded declaration, the association rules and the building's own rental history, not an ordinance written for residential districts. Licenses and tax accounts stay with the owner who holds them, so a buyer registers their own.

Advertising a unit as a proven short-term rental without reading the recorded documents is a risk a seller does not need to take. A buyer's lender or attorney will ask anyway.

8. What does the association owe me, and how fast?

Alabama puts a clock on the resale documents. Under Ala. Code 35-8A-409 a purchaser's written request must come within 14 days of signing the contract. The seller then has 15 days to furnish the documents, and must furnish them before the conveyance. The association has 10 days after a unit owner's request to produce its certificate.

Request the certificate from the association the day the contract is signed, not the day the buyer asks. Ask what the association charges and how it delivers. A seller already holding the budget, the bylaws and the insurance declarations can answer a buyer's request in an afternoon.

Waiting on a part-time association office in July is how that window closes. The obligation sits with the seller, not the buyer, and a late delivery can hand a buyer a reason to walk at the worst possible moment.

9. What gets held back at closing if I live out of state?

Alabama withholding. On a sale by a nonresident seller the buyer withholds and remits to the state once the purchase price exceeds $300,000, the threshold the Department of Revenue set for sales made after December 31, 2008. The rate is 3 percent of the purchase price where the buyer is an individual, and 4 percent where the buyer is a corporation, partnership or unincorporated association. It is a prepayment, not a final tax.

Ask the closing attorney to show the withholding as its own line on a draft settlement statement early, so the net proceeds figure is real. Ask the accountant which Alabama filing recovers the difference.

Finding this out at the closing table changes a seller's plans for the money. The number is predictable, so there is no reason to meet it late. Ask for the draft statement two weeks out.

Five moving parts in a furnished condo sale, the document that carries each one, and who settles it.

Frequently Asked Questions

What is the hardest month to sell a furnished beach condo?

Access, not the calendar, is what makes a month hard here. A unit booked solid through the summer is difficult to show, and a unit sitting empty in January shows well to the buyers who are actually looking. Sellers who list in the slower months trade some traffic for the ability to open the door on a day's notice.

Should I sell it empty instead?

Rarely, in a rental building. The furniture is part of what the buyer is buying, because a turnkey unit can take bookings the week after closing. Selling empty makes more sense when the furniture is worn enough to work against the photographs, or when the buyer plans to live there full time.

Do I have to show a buyer the rental income?

Not unless asked, and then it has to be accurate. Alabama follows caveat emptor on the sale of an existing home, and the state real estate commission's consumer guidance says sellers and their agents must not misrepresent conditions they are asked about. If income is offered as a selling point, offer the actual owner statements rather than a projection.

What about the linens, the kitchen items and the televisions?

Put every one of them on the inventory or expect an argument. Rental programs often own the linens, and sometimes the televisions, the sound bars or the beach gear. The question to answer before the listing goes live is which items belong to the owner, which to the program, and which have already been written off.

Can a buyer tour the unit while guests are staying in it?

Usually not, and that is the practical limit on a furnished rental sale. Guests hold a contract for the unit, so showings get scheduled into turn days and gaps. Sellers who want weekend showings during the season should expect to block dates and accept the lost revenue.

Have Heather Loper & Associates price the furnished sale

Heather Loper & Associates sells furnished condos in Orange Beach and Gulf Shores, where the inventory, the forward bookings and the management agreement all have to be settled before a listing goes live. Sellers comparing the best real estate agents in Orange Beach can reach the team at (251) 504-1171 or through heatherloper.com.

This article is general information about Alabama condominium, lodging tax and withholding rules. It is not legal or tax advice. Check your own situation with an Alabama attorney and a tax professional.