A review of the documents as a condition of sale for a condominium is a crucial part of the buyer’s due diligence. It’s the seller that usually provides the buyer with the document package to be reviewed – but as a buyer, you might want to reconsider that.
Read what Lou Pesta, real estate lawyer with Walsh LLP recently experienced:(Incidentally, if you’re looking for a real estate lawyer, I highly recommend Lou)
Last week I was reviewing a set of condominium documents for a prospective buyer. Due to the minutes indicating that some repairs were going to be carried out in 2015 I called the management company to determine whether there were sufficient funds in the Reserve Account to cover the cost.
I was advised that there would, in fact, be a Special Assessment in 2015, 2016 and 2017 which is all apparent on the face of the budget. I responded that I had the budget and there was nothing mentioned about the Special Assessments. The manager told me to pull the Budget from the website, which I did.
The Budget on the website was identical to the one that was provided to me with the condominium package with one exception. The copy provided to me was missing the one page that set out the Special Assessment expectations over the next three years. What a coincidence that it would be the one page with the projected Special Assessments that was lost from my package.
I am saddened to post this discussion as a warning to individuals not to necessarily rely on the “completeness” of documents that are provided as part of the condominium document condition.
Was the missing page an accident or deliberate lack of disclosure?
Either way, it doesn’t appear that this is an isolated incident. The president of one condo document review company in Alberta wrote that “I see this sort of thing regularly.”
As a buyer, what can you do to protect yourself?
Hire someone who specializes in reviewing condo documents. They’re usually tuned into the details and will likely be able to sense something is amiss.
If you’re getting the documents from the seller, have them forward the package to you electronically (ie. PDF) That way there won’t be any “your word against theirs” issues if it came to light that pages were missing. The documents are either attached in the email or they’re not.
Many property management companies have the documents online for purchase nowadays. Compare what you received to what the management company has available. If there are any doubts, purchase the documents yourself directly from the condo management company.
Finally, try to speak to other owners in the complex. They are a great source and can be more forthcoming with information about any upcoming special assessments or other issues.
Related post: Neighbors know best