Questions to ask the condo board

In the process of evaluating a resale condominium for purchase you have the opportunity to review the “Resale Certificate” which provides documentation regarding the financial statements, the rules and regulations and the history of the building. Sometimes it’s hard to determine what out of all the information you are reading is deemed to be important to you as a buyer. As a potential buyer, you also have the option of contacting the Homeowner Association Board to ask them specific questions to help with your decision. I always recommend to potential clients that they talk with someone at the Board directly as well as try meeting some of the neighbors surrounding the unit they are considering. This gives you a much better idea of the building and the environment that you are buying into. By asking some specific questions, you’ll get an idea of how responsive the Board is, how organized they are and what it’s members are like.

Here are some Questions to Considering Asking the Board
1. How much money does the Association keep in the Reserve Account and how is that money being invested?
2. What does and doesn’t the monthly home owner dues (the assessment) cover. For instance, some dues cover maintenance of common areas, recreational facilities, garbage, water, basic cable, landscaping etc. Some associations handle window replacements on an Association level, others leave it up to the individual homeowner.
3. What clauses have been Grandfathered in to the Bylaws and restrictions? For instance, you might read in the Resale Certificate that they allow owners to rent out the units only to find later on that there was a clause grandfathered in that says that buyers after a certain date cannot rent out their units, but buyers who bought earlier can still rent them out.
4. What percentage of the building is owner occupied and what percentage are rentals? Are there any rental units adjacent to the unit that you are considering purchasing?
5. Are the home owner dues keeping pace with the annual rate of inflation? When was the last time the dues were raised? Smart boards raise assessments a certain percentage each year to build reserves to fund future capital projects and repairs.
6. What if any special assessments have been mandated in the past five years and how much was each home owner responsible for paying in the special assessment? Large and/or expensive assessments could be a red flag about the condition of the building and/or the condition of the reserve account.
7. What if any pending capital projects are there in the next five years? Does the roof need to be replaced in 3 years? Are they planning on painting the building or replacing elevators? A good building will have a schedule for capital projects that are scheduled at least 5 to 10 years out so that the Association can plan for their costs and allocate money wisely.
8. Has there been any litigation on the project? If the builders or homeowners are involved in a lawsuit many banks will consider too high of a risk and not fund loans to purchase in the building. Also if pending repairs are needed, is the settlement enough to cover repairs and leave money in the reserve account for future needs?
9. What is the average annual turnover in the building? How long has the longest owner been there?
10. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Take a look to see how it’s holding up. Ask residents about their perceptions of the builder.
11. If it’s a mixed use building (residential + commercial) are there multiple associations for the property? In very large developments, umbrella associations, as well as the smaller association into which you are buying may require separate assessments. If there is a separate commercial association in the building, what percentage are they responsible for if the building needs repairs? What kinds of restrictions are on the commercial spaces? For instance, can a nightclub or restaurant occupy the space?
12. What if any changes to the parking or storage unit numbers have there been. Often you will find that when a building was built each unit was assigned a specific parking space but over the years for different reasons, units have swapped spaces or sold one of their parking spaces so that the unit numbers on the title or the Resale Certificate are not the current ones the seller is using.
13. Are there any issues or problems that the owners or building is facing right now that is not written in the Resale Certificate that as a new owner I would be encountering?

When purchasing a condominium there are many things to consider and having a diligent Buyers Agent to help you navigate the purchase is highly advised. You can also have an attorney who specializes in Condominium Documents go through the Resale Certificate and the financial statements for you to look for any additional red flags that you might not be aware of.