Condo Due Diligence

27 Apr

Metro®Boston, Publication Date: April 25, 2012
By Attorney George Warshaw

Expanded Content:

Buying a condo? The condo market has heated up. Do you know what to look for – or look out for? Here are a few of the things that you should consider or ask about:

The Budget.

  • Is the budget adequate to cover the operating costs or running at a deficit?
  • Are any Unit Owners more than 30 or 60 days in arrears in monthly payments?
  • Are there any sharp increases in specific expense items?

Reserves.

  • Do reserves meet the Fannie Mae minimums (10% of budget + separate insurance deductible)?
  • Are reserves for improvements and major repairs sufficient?
  • Have there been major increases or decreases in reserves or expense items over time?

Repairs, Improvements and Assessments

  • What repairs are presently planned?
  • Any special assessments or improvements currently in effect, planned or being discussed?

Litigation

  • Is the association involved in any litigation?

Occupancy

  • How many units are owner-occupied or rented?
  • Have there been any sound and noise complaints?

Condo Docs:

  • Verify parking rights, locations and space numbers.
  • Review recorded condo plans. Do they match the present layout of the unitt?
  • What exclusive use rights are assigned to the unit? Who pays for repairs/maintenance for exclusive use areas?
  • Are there restrictions on pets?
  • Are there limitations rentals?

Board of Directors and Unit Owners Meeting Minutes

  • Do the minutes indicate upcoming major repairs, improvements that could result in a special assessment?
  • Do the minutes indicate upcoming increases in fees or charges?
  • Do the minutes indicate problems that you should know about?

My view: ask for two years worth of minutes.

Call or email me if I can be of help in buying or selling your condo, or if you have questions you need answered. metro@warshawlaw.com, 617-262-7800.

 © 2012 George Warshaw.

George Warshaw is a real estate attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions at metro@warshawlaw.com.

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