Read Your Condo Docs!
Real estate is purchased backwards. That is, a prospective Buyer tours the home for 15-30 minutes, and he or she submits an offer. If that person's offer is accepted, the Buyer then gets to inspect the property. Although this is standard practice, wouldn't it be better if the Seller provided all the disclosures prior to a Buyer submitting his or her offer?
Just the other day, our real estate team was notified that our Buyer's offer was accepted. We were thrilled because our Buyer had submitted offers on two other listings in the same building this past year. Third times a charm, right?
One of the Purchase Contract contingencies relates to the condo documents.If you purchase a condo, the condo document contingency would be applicable to your transaction.
As a complete set, the condo documents can be hundreds of pages long. These documents range from house rules, to the condo's propose budget for the year, to the home owners association's (HOA) latest meeting minutes.
When our Buyer received the condo documents, one of the first documents we reviewed was the Project Information Form RR105c, or simply known as, RR105c. Here is an example of a RR105c:
As you can see, the RR105c form is a like disclosure statement for the condo complex. Although every disclosure listed is important, one of the first things we want to identify is if there are any current or pending litigation and if there are any current or upcoming assessments.
In the case with our Buyer, it was noted that there would be an upcoming assessment to fix the condo's plumbing system. Since there wasn't enough information about this possible assessment, our Buyer decided to cancel the transaction.
What would have happened if the condo documents were presented to us prior to submitting an offer? I think our Buyer probably would have not submitted an offer if we knew this information upfront.
Although companies like Zillow are trying to change the real estate sales world, I feel our industry would be better off if disclosures were presented upfront. This would benefit both parties. For the Buyer, it would allow a person to make a more educated decision on if he or she should submit an offer. From the listing side, the Seller can reduce or eliminate certain contingencies from the Purchase Contract because some (or all) disclosure information would be presented prior to a Buyer's offer being submitted.