In the D.C. and Northern Virginia area, there is a big market for condominiums. In some areas, like Alexandria City, and the Rosslyn-Ballston corridor of North Arlington, condos actually represent the majority of available housing.
One key item to be aware of when purchasing or selling a condominium is the rules regarding Condominium Resale Disclosure Documents. Every condominium seller is required to obtain a Condominium Resale Package and deliver it to the purchaser between the time of ratified contract and settlement. In Virginia and in D.C., a purchaser may cancel the real estate contract within 3 days after receiving the Resale Package. This is often referred to as a right of rescission. This is a no-questions asked out from the purchase contract with a return of the earnest money deposit. D.C. and Virginia buyers and sellers need to be cognizant of this crucial deadline. While buyers and sellers may waive inspection contingencies, appraisal contingencies, and financing contingencies, the Condominium Resale Disclosure necessity and rescission right is not waivable.
What is contained in the Condominium Resale Disclosures?
During a review of these documents what should a purchaser try to find?
I have reviewed many sets of condominium documents for clients both as a Realtor and as a real estate attorney as well as a purchaser of my own condominium in Alexandria. Virginia and D.C. law are nearly identical on what must be disclosed. For purposes of this article, I will discuss Virginia requirements.
Virginia Condominium law requires that the following items are disclosed in the condominium resale certificate:
- Statement of any required special assessments in addition to the regular condo fee assessment during the current or next fiscal year
- Statement of all assessments and any other fees or charges imposed on condo unit owners and status of current owner’s account
- Are there any other entities to which the unit owner may be liable for fees?
- How much money is in the condo association’s reserve account? Are any of those funds designated for any specified project?
- Copy of the condo association’s current budget
- Copy of statement of condo association financial condition
- Are there any lawsuits pending or judgments against the condo association that could have a material impact on the association or unit owners?
- Insurance coverage provided for the condominium
- Statement that all improvements or alterations made to condo unit are in accordance with condo policies
- Copy of the current bylaws, rules and regulations and architectural guidelines of the condominium
- Copy of any notice given to unit owner of any current or pending rule or architectural violation
- Certification that the condo association has filed their annual report with the Virginia Real Estate Board
- A statement of any limitation on the number of persons who may occupy a unit as a dwelling.
In addition to these required items, most condominiums will also have a guidelines and policies book which will outline such items such as a pet policy, move-in fees, elevator guidelines, use of the common areas, parking, visitors, etc. However, this is auxiliary and not required by the Virginia Condominium Act.
The condo disclosures for some condos in D.C. and Northern Virginia can run several hundred pages. Fun reading! I know that many people never read these materials, but I advise my clients to pay attention to several key items in their review.
What’s Important?
Before you fall asleep trudging through the endless pages of the condo disclosure, here are my recommended priorities in reviewing condominium documents:
- Check for special assessments – this is VERY IMPORTANT. You don’t want to be surprised and stuck with purchasing a unit that has a large special assessment due either at closing or later.
- Look at the condominium budget and reserve account. Especially in older condo buildings, you want to make sure that money is reserved and budgeted for future repairs. If the reserves are weak, you may expect to receive a large special assessment or a major hike in condo fees when the buildings aging air conditioning system needs an overhaul.
- Pay close attention to whether any lawsuits or judgments are pending against the condo association. This can also be a source of condo fee hikes and special assessments.
- Find out if the current owner has any violations of the condo rules and policies. If so, you can be responsible for remedying these violations once you are the new owner.
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