The Condo Documents: The Budget Isn't Just a Cure for Insomnia

The unit you just fell in love with was beautifully staged, had a sleek new kitchen, lots of room and an amazing view. Then your offer got accepted by the sellers.

So what's next?

In the Washington, DC area, buyers have some period of time after the seller accepts their offer to go over the owners' association documents, including the one I think is the most important: the budget.

Even if numbers make your eyes glaze over, give this document a careful examination. If the condo has issues, you might find some of the red flags in the budget.

Here are some suggestions:

• High-ish fees may not be as much of a reason for concern as low-ish reserves. Well run buildings put money away from each condo fee payment to cover expenses for repairs that they can foresee, and also for emergencies. So look at the reserves.
• When a building has insufficient reserves, they may pay for repairs by levying special assessments against the owners. Look for a history of these charges, and ask if there are any about to be levied.
• Does the building have unusually high legal fees? If owners have poor conflict resolution skills, they might resort to litigation. And when they do, the only winners are the attorneys each side hires to argue represent their cause. If someone who does not live in the building is suing (this might be a personal injury type of suit) does the building carry sufficient insurance to cover a damage award?
• Are there many members who are not paying their condo fees? This can happen when a condo has a lot of short sales or foreclosures, and it can wreak havoc with association finances.

If you have questions, the seller might not be the one to ask. It's best to go to the property manager or someone who is an officer in the association or on the Board of Directors - and it should ideally be someone without a financial interest in the unit you are buying.

Bottom line? A great deal in a building that is in bad financial condition is not a good deal.

If you are planning a move to or from the Washington, DC area, I can help! I am licensed in the District of Columbia, Maryland and Virginia. You may call, email or text me at:

Housepat@mac.com

202-549-5167