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When purchasing a condo, it is important to understand the Condo Rider, as well as some key items that you must take into consideration during Due Diligence.
Condo Rider Highlights
What are the condo docs? (contained in Condo Rider CR-4 Rev 9/15 in Paragraph 5(b))
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- Declaration of Condominium
- Articles of Incorporation
- Bylaws and Rules of the Association
- Copy of Most Recent Financial Statements
- Frequently Asked Questions and Answers (Click here to see a reference)
- It is the responsibility of the Seller to provide this to the Buyer. The Buyer has 3 days to review the docs and the Buyer may cancel the purchase and sale contract within these 3 days if there is something in the docs that the Buyer does not feel comfortable with. If the seller does not have them available, the Association usually will charge to obtain a new set of Condo Docs.
Who pays for Special Assessments (contained in Condo Rider CR-4 Rev 9/15 in Paragraph 3(c))
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- Any pending or planned special assessment NOT disclosed in paragraph 3(c)(i) must be paid in full by the SELLER at Closing as per paragraph 3(c)(iii), unless explicitly stated otherwise in the Contract.
- IF any pending or planned special assessments are disclosed in paragraph 3(c)(i) and the association allows the payments for the special assessments to be made in installments, then the Buyer and Seller may select who pays for the Special Assessment as per paragraph 9(c)(ii).
- It is the responsibility of the Buyer during due diligence to confirm if any possible special assessments have been discussed by the Board and disclosed to the Seller, and the Buyer may negotiate with the Seller as to a credit or a withholding amount at Closing.
- If no special assessments have been implemented as of the time of the execution of the Contract and are assessed after the Closing, the Buyer will not have recourse against the seller.
Key Due Diligence Tips for Purchasing in a Condo
What is the financial situation of the Condo?
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- Are there pending or planned special assessments?
- Are there reserves? If so, how much? How does this compare to current operating budget and to current special assessments?
- If there are pending financial obligations, does the Condo provide a Sufficient Funds Affidavit where the probability of additional special assessments for the work being done is minimized?
Is there maintenance/repairs/construction currently being done or planned in the common elements of the Building(s) or other capital improvements being done or planned?
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- What kind of work is it?
- Is any of the work related to the County-mandated recertifications?
- Is the cost currently covered by the budget or is there already an assessment in place to cover the projected cost of the work?
Confirmation of Limited Common Elements, including parking spaces and storage units?
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- Does the condo assign the current spaces of the Seller or does the Condo reassign the spaces at Closing?
- Does the condo have the parking spaces and storage spaces assigned to the unit in their database?
- Does the Seller currently have use / possession of the parking spaces or storage units?
You can download a sample receipt of condominium documents by clicking here.