As part of a condominium purchase/sale, the seller will order a resale certificate from the management company and provide that to the buyer for the buyer's review (usually a five day review period.) The resale certificate is a five page form with a small mountain of exhibits that are attached. Some condos may not have all of the exhibits, but generally the package includes:
-
Resale certificate. 5 pages of good, basic info about the condominium association that you and your lender will need to read through. Talks about homeowner's dues, any pending assessments or litigation, percentage owner-occupancy in the building and how much money the association has in reserves.
-
Reserve study. An indepenent, professionally preapared review of the building's long term income and expenses (operating and maintenance/renovation costs) with recommendations for homeowner's dues funding levels over time. Usually the reserve study begins with an executive summary.
-
Articles of Incorporation. The legal document and any amendments used to form the condominium association. Generally boilerplate, pretty dry stuff.
-
Declaration. Usually the biggest piece of the resale certificate by weight, this describes the boundaries of each unit, the common areas and limited use common areas, the share of common expenses (homeowner's dues), how the homeowner's association works and basic rules for the condo. Some key things to look for here include any restrictions on types of flooring (like hardwoods,) being able to rent your unit out in the future, allowed improvements/renovations and pets.
-
Bylaws. Rules that are approved by the condo's board of directors and voted on by the homeowners, intended to complement what is missing or not specific enough in the declaration.
-
Rules and Regulations. Additional rules and regulations adopted by the condominium.
-
Management Agreement. Included if the condominium hires a management company to professionally manage the association.
-
Operating Budget. The current year budget describing income (primarily from dues,) planned operating and maintenance costs and planned contribution to or withdrawals from the building's reserve account. It's good to compare this to the recommendations from the reserve study.
-
Annual Financial Statement. The balance sheet and breakdown of revenue and expenses for the most recent whole year. Things to look for: were there significant out-of-the-ordinary expenses? how much went into/came out of the reserve account and was that planned?
-
Current Financial Statement. The balance sheet and breakdown of revenue and expenses, current to within the past 120 days. Things to look for: any unusual expenses or shortages in the revenue (homeowners not paying their dues.)
-
Meeting Minutes. The past 12 months' meeting minutes. If there's anything unusual going on in the building or significant improvements/expenses anticipated, it'll usually be talked about in the meeting minutes.
I review all of this for both sellers and buyers as soon as the resale certificate is available, in order to highlight anything that may be particularly important as a buyer reviews the whole package.