Tuesday, September 8, 2009

Bad Information Can Lead to Association and Owner Headaches

Several years ago my sister was looking to buy a condominium unit. When she found a 2-bedroom unit in a mid-rise building in Broward that she really liked she asked me to come with her to see it. During our visit, my sister asked her realtor whether or not she could install a washer and dryer inside the unit. We had already seen a common area laundry facility on every floor and there were not currently any hookups for a washer or dryer in the unit. The realtor calmly looked at my sister and said, "Of course you can. Many people have!"

Had my sister actually listened to this advice, bought the unit and installed the washer and dryer inside her unit she could have faced potential recourse from the association for an illegal material alteration to the common elements. Of course, if the association had pursued her and prevailed, my sister would also have been on the hook for the association's attorney's fees and costs. This is just one example of the type of bad advice many potential new purchasers take from others when they should be reading the association's governing documents and asking the right questions to determine if the community is a good fit for their particular lifestyle.

Here are some other examples of potentially bad advice:

1. Parking is never a problem here;

2. Ignore the sign out front, plenty of young families live here;

3. Renting here is not a problem;

4. I'm pretty sure they have reserves;

5. Pets aren't allowed but as long as you keep the cat in the unit and no one sees it you're ok;

6. The roof is in tip top shape!!

If you are thinking about buying a unit in a condominium association, you are entitled to receive and review a Question and Answer Sheet which addresses some of the items listed above. Of course, it is still advisable to read the governing documents and not rely solely on the Q and A Sheet but it is a good start. If you are thinking about purchasing a home in an HOA, you are not entitled to a Q and A Sheet so you will have to do a little more digging on your own.

I told my sister to look for/ask about the following:

1. Use restrictions regarding pets, parking, leasing, age, etc. to determine if the community is a good fit;

2. Ask if reserves are fully or partially funded. If they are not, for how long have they been waived;

3. A copy of the budget;

4. A copy of the last reserve study;

5. A copy of the building's recertification documentation if applicable;

6. A copy of the association insurance policy to determine the coverage limits and the deductible for which she as a unit owner will eventually be responsible;

7. Check with the Division to see if a complaint has ever been filed against the board;

8. Ask if elections are held each year or if the same board remains seated year after year due to lack of membership interest; and

9. Check out the association's website or read a copy of its newsletter if they have one.

Of course there is so much more you could ask for but a potential purchaser is often limited by his or her seller's commitment to obtain this information on their behalf. I'm convinced that many, many problems in common interest ownership communities could be avoided if potential purchasers relied on accurate information and reliable sources to obtain the information they need to make an informed purchase decision.

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