You found the perfect condo. Love at first sight! The unit’s layout is ideal. Everything, including the pool and surrounding deck, the fully-equipped fitness center, the lush landscaping, are all on your wish list. BUT, before you sign the sales contract, you need to research all of the facts concerning the condo community.
A recent article by Jimmy Jackson, an associate with Rose & Womble Realty and chairman of the Hampton Roads Realtor’s Association, appeared in The Virginian-Pilot and addresses the need for a behind-the-scenes look at the condo association’s background (Examine the Resale Package Before Condo Love at First Sight).
Several states, including Virginia, have laws that require condo and property owners association (POA) sellers to provide buyers with a resale package, also known as a resale certificate. Among the documents that must be provided include:
- The current reserve study report describing the status and amount of replacement fund earmarked for any specific project.
- A copy of the current budget and a copy of the financial balance sheet for the previous fiscal year.
- A copy of the current bylaws, rules and regulations, and architectural guidelines.
- A copy of any approved minutes from the previous POA and Board of Directors meetings from the past six months.
- A statement of any additional spending that has been approved for the upcoming fiscal year which shall require a special assessment in addition to the regular assessment.
- A statement of any legal judgments or pending lawsuits against the association.
This reserve study is vital since it will reveal any pricey projects with looming assessments coming up that will impact the buyer’s budget and/or cost of living increases. Buying into a condo community or POA without a healthy reserve means you may get hit with huge assessment when repairs and replacements become unavoidable.
Under Virginia law, any buyers who sign a purchase contract must provide the resale certificate in a timely manner after the contract is signed. The selling agent obtains the package which then goes to the buyer’s agent and the settlement company.
The buyer then has the option to cancel the contract within three days of receiving the package. No reason needs to be given if the buyer cancels the contract. If the buyer does not have any objections within the three-day time period, the purchase continues.
Neither the buyer nor the seller can waive the required resale package be provided. As a matter of fact, the law gives every buyer a three-day “cooling off” period. This is provided so that the potential buyer can make the final determination as to whether the initially much-desired condo is really everything they desired.