As always, this post is not legal advice. For a specific legal question, consult an attorney.
Buying a condo can make a lot of sense, particularly if you can purchase a unit close to work (e.g. downtown) and if your “lifestyle” is conducive to apartment-style living (e.g. no kids, no pets). If you’ve decided to take the plunge, make sure you do your homework. The Seattle Times had a good piece on the topic a couple of years ago. That article notes several sources of information that you should review prior to purchasing, including the public offering statement (for new construction) or the resale certificate (for a previously owned unit). In reality, your homework can begin and end with the public offering statement or resale certificate, as by law each of these must contain the information necessary to make an informed decision.
That said, don’t revert to your younger self and “forget” to do your homework. The statement or certificate can be quite intimidating, often including hundreds of pages of information. Nonetheless, you need to sit down and dedicate some time to reviewing it in detail. Reading it in bed, before drifting off to sleep, is NOT sufficient (although you may find a cure for your insomnia). The disclosures contain information about the financial and physical health of the devlopment, as well as the rules that will govern how you can use the unit (such as renting it out). Ignore this information at your peril — you may find years later that you made a very poor decision, all because you did not take the time to review the provided information.
Finally, given that the disclosure contains hundreds of pages, many of them written in dense “legalese,” you may wonder whether an attorney should also review it on your behalf. An attorney can explain the disclosure and answer any questions you may have. Moreover, the attorney may be able to identify issues of concern that you did not appreciate. On the other hand, the attorney does not and can not know everything that is important to you. Therefore, while you may benefit from an attorney’s review, the key is that YOU must take the time to review the disclosure carefully. If, after doing so, you decide that the condo is not for you, both disclosures create a right of rescission (7 days for a public offering statement, 5 days for a resale certificate) so you can cancel your purchase and sale agreement and avoid the mistake entirely.
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Nice post, Craig. It’s also important to provide a copy of the resale cert. to the lender (if there is financing involved with the purchase) as soon as possible. They will also have certain requirements such as owner occupancy ratios, insurance and how much the HOA has in reserves.
Yes, and don’t forget those meeting minutes — good reading! Our former condo association’s minutes would have made a good soap opera. I’m surprised we were able to sell.
Speaking of meeting minutes, I routinely ask for the last 12 months minutes and last 3 years general meeting minutes so the client can see what the association has been planning and discussing.
Good post. Every Buyer needs to be aware when buying in to an associaition.
Excellent post, Craig. Take your time, read through things, obtain advice from a recognized attorney.
~ Mark