Buying a condominium is an exciting investment, but before you commit, it’s crucial to review key documents to ensure you’re making an informed decision. These documents reveal critical details about the condo's financial health, governance, and potential red flags that could impact your ownership experience.
This comprehensive guide will help first-time buyers and seasoned investors navigate the paperwork required for a smooth and secure condo purchase.
1. MLS Listing: Your First Look at the Property
The Multiple Listing Service (MLS) sheet provides an overview of the condo, but don’t just take it at face value—verify the details!
✅ Key Things to Check:
Accurate Unit Details – Ensure the square footage, layout, and amenities match the listing.
Included Features – Does the price include parking, storage, or appliances?
HOA Fees & Inclusions – Understand what’s covered in your monthly condo fees.
🚩 Red Flags:
Discrepancies between the listing and reality.
Missing details on fees and inclusions.
2. Reserve Fund Study: Is the Condo Financially Stable?
A healthy reserve fund ensures the building can cover major repairs without imposing unexpected fees on owners.
✅ What to Look For:
Current Reserve Fund Balance – Is there enough money for upcoming repairs?
Planned Upgrades & Repairs – What major expenses are expected in the next few years?
🚩 Red Flags:
A low reserve fund could mean higher fees or special assessments in the future.
An outdated study may not reflect the true financial health of the condo.
3. Condo By-Laws: Know the Rules Before You Buy
Condo by-laws dictate what you can and cannot do as a unit owner.
✅ Must-Check Rules:
Pet Policies – Are there breed or size restrictions?
Short-Term Rentals – Can you list your unit on Airbnb?
Renovation Restrictions – Can you remodel your unit freely?
🚩 Red Flags:
Strict rental restrictions could limit your investment potential.
Excessive restrictions on daily living (noise, decor, visitor policies).
4. Financial Statements: Is the Condo Well-Managed?
The condo corporation’s financial statements give you a snapshot of how well the building is managed.
✅ What to Review:
Annual Budget – Are condo fees being used effectively?
Debt & Deficits – Is the condo running at a loss?
Recent Expenses – Are funds being spent wisely on maintenance?
🚩 Red Flags:
Consistently rising condo fees with no clear reason.
Debt or unpaid vendor bills indicating poor management.
5. Status Certificate (Estoppel Certificate): The Condo’s Report Card
A status certificate is essential to confirm there are no financial or legal issues affecting your potential purchase.
✅ What to Look For:
Outstanding Fees – Are there unpaid condo fees from the current owner?
Pending Lawsuits – Is the condo involved in any legal disputes?
Planned Fee Increases – Are monthly condo fees expected to rise soon?
🚩 Red Flags:
Legal battles with contractors, past owners, or the city.
Surprise assessments that could cost you thousands after purchase.
6. Property Condition Disclosure: Any Hidden Issues?
This document helps you avoid unpleasant surprises by listing known defects in the unit.
✅ Things to Verify:
Past Repairs – Have major issues been addressed?
Water Damage & Mold – Any history of leaks or infestations?
HVAC, Plumbing & Electrical – Are the systems in good condition?
🚩 Red Flags:
Undisclosed repairs or past issues (like water damage).
Signs of neglect that could lead to costly repairs.
7. Title Deed: Confirm Legal Ownership
A title search ensures the unit’s ownership is clear and free of legal complications.
✅ What to Check:
No Liens or Claims – Ensure there are no debts attached to the unit.
Legal Description Matches – Confirm the unit details align with official records.
🚩 Red Flags:
Previous disputes or unresolved legal claims on the property.
Errors in ownership records that could delay closing.
8. Parking & Storage: Titled vs. Assigned—Know What You Own
Many buyers assume they own a parking stall or storage locker, only to realize later that it's either shared or subject to condo board rules.
✅ Parking Considerations:
Titled Parking – You own it, and it appears on the title deed.
Assigned Parking – The condo board assigns and can reassign spots at any time.
Leased Parking – You don’t own it; you pay a fee for use.
✅ Storage Lockers:
Titled Storage – Legally yours, included in the title deed.
Assigned Storage – The condo board can reallocate or remove access.
🚩 Red Flags:
Unclear ownership – Is your parking or storage space actually yours?
Restrictions on usage – Some buildings don’t allow oversized vehicles or additional shelving.
💡 Tip: Always request confirmation in writing regarding parking and storage ownership before finalizing your purchase!
9. Condominium Declaration: What Are You Actually Buying?
The condo declaration defines what’s yours and what’s shared within the building.
✅ Understand:
Common vs. Private Property – Know your responsibility for repairs.
Shared Amenities & Rules – What’s included in your fees?
Voting Rights & Decision-Making – How much say do you have as an owner?
🚩 Red Flags:
Confusing maintenance responsibilities (who pays for window repairs?).
Unexpected restrictions on how you can use the property.
10. Insurance Certificate: What’s Covered?
Condo insurance varies between buildings, so you need to know what’s included and what’s not.
✅ Verify:
Building vs. Unit Coverage – Does the condo’s insurance cover interior damages?
Liability Coverage – Are accidents in shared spaces protected?
Special Assessments Protection – Are you covered for unexpected fees?
🚩 Red Flags:
Lack of proper insurance coverage for major disasters.
High deductibles or gaps in coverage that could leave you financially exposed.
Final Thoughts: Buy with Confidence
Purchasing a condo is a big financial decision, and reviewing these key documents will help you avoid costly mistakes.
🔍 Before you sign, ask yourself:
✅ Is the condo financially stable?
✅ Do the by-laws align with my lifestyle?
✅ Are there any red flags in the status certificate?
✅ What extra fees or assessments might come up?
✅ Is my parking and storage titled or just assigned?
By doing your due diligence, you can protect your investment and enjoy stress-free condo ownership.
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Disclaimer:
The information provided in this blog is for general informational purposes only and should not be considered legal, financial, tax, or investment advice. While we strive to ensure accuracy, real estate laws, market conditions, and regulations change frequently. Readers are encouraged to conduct their own research and consult with qualified professionals such as real estate attorneys, financial advisors, mortgage brokers, or tax experts before making any decisions related to buying, selling, or investing in real estate. We do not assume any liability for actions taken based on the information provided in this blog.
