Before You Buy the Condo: 7 Documents That Can Change the Deal

A beautiful kitchen, private balcony, and great location may get your attention, but when you buy a condo, you are also buying into the building and its association.

Before moving forward, take time to understand how the property is managed, what expenses may be ahead, and which rules could affect your plans. These seven documents can reveal what listing photos cannot.

These documents outline how the building operates and what owners may, and may not, do.

Look for rules covering:

• Rentals and leasing restrictions

• Pets

• Moving procedures and fees

• Renovations

• Parking and storage

• Short-term rentals

Do not assume your plans will be allowed. If you hope to rent the unit later, remodel the kitchen, or bring a large dog, confirm the rules before committing.

The budget shows how monthly assessments are being used to operate and maintain the property.

Review major expenses such as insurance, utilities, management, landscaping, staffing, and routine repairs. Compare the budget with the building’s current assessment amount and ask whether expenses have recently increased.

Low monthly assessments may look appealing, but they are not automatically a sign of a financially strong association. The more important question is whether the building is collecting enough to meet its needs.

Remember that condo assessments are generally paid separately from the mortgage and should be included when calculating your total monthly housing cost.

Reserves are funds set aside for major repairs and replacements. Depending on the building, those expenses could include:

• Roofing

• Masonry and tuckpointing

• Elevators

• Windows

• Plumbing systems

• Heating and cooling equipment

• Garage or parking-deck repairs

Review the association’s reserve balance and, if available, its reserve study. A smaller reserve fund is not necessarily a deal-breaker, but it may increase the likelihood of higher assessments or special assessments when major work is needed.

For condominium owners, this can also be a good time to consider how a private balcony or terrace is presented and maintained.

Meeting minutes can provide a behind-the-scenes look at what is happening in the building.

Watch for repeated discussions about leaks, mechanical issues, resident disputes, insurance claims, major repairs, or proposed rule changes. Pay attention to projects that are being considered but have not yet been formally approved.

One minor maintenance issue may not be concerning. The same unresolved problem appearing in several meetings deserves a closer look.

A special assessment is an additional charge used to pay for expenses that the regular budget or reserves cannot fully cover.

Ask whether the building has:

• A current special assessment

• Approved an upcoming assessment

• Discussed a possible future assessment

• Recently completed a major project

• Borrowed money for building improvements

If an assessment exists, confirm its total amount, payment schedule, remaining balance, purpose, and who will be responsible for paying it after closing.

The association’s master policy typically covers certain shared areas and building components, but it does not eliminate the need for an individual condo policy.

Review what the master policy covers, its deductibles, and whether there are any recent or unresolved claims. Then speak with an insurance professional about appropriate coverage for the unit, personal belongings, interior improvements, liability, and possible assessment-related exposure.

The Consumer Financial Protection Bureau notes that condo owners generally still need individual coverage even when the association maintains master insurance.

Active litigation involving the association could affect expenses, insurance, or financing. A high level of unpaid assessments may also place more financial pressure on the owners who are paying consistently.

Ask whether the association is involved in any pending lawsuits and whether owners owe significant unpaid assessments. Your lender may also review the building’s finances and other conditions when determining whether the property qualifies for financing.

Before moving forward, work with the appropriate professionals to review:

☑️ Declaration, bylaws, and rules

☑️ Current operating budget

☑️ Recent financial statements

☑️ Reserve information or reserve study, if available

☑️ Recent board meeting minutes

☑️ Current and proposed special assessments

☑️ Master insurance information

☑️ Pending litigation

☑️ Owner delinquencies

☑️ Upcoming capital projects

Under Section 22.1 of the Illinois Condominium Property Act, a resale disclosure can include key information such as governing documents, assessments, reserves, anticipated capital expenditures, insurance coverage, and pending legal action.

No condo association is perfect. The goal of due diligence is not to find a building that has never needed repairs or raised its assessments. It is to understand the building’s finances, responsibilities, and potential risks before making a major commitment.

The right condo should work for more than your preferred location and lifestyle, it should also fit your financial plans.