In some of Northern Virginia’s more urban neighborhoods, condominiums represent a significant portion of the real estate market. Condos tend to dominate the housing market in communities closer to the Metro and inside the Beltway. Home buyers looking to live in these bustling, big-city like areas should always consider buying a condo because it could be the most affordable option and a great investment. However, it is vital for any potential condo buyer to be familiar with the state’s condo resale disclosure laws to be successful. When you work with a great real estate agent, your agent will know what exactly what the laws are in your state and know what to look for when reviewing condo disclosure documents. That being said, it doesn’t hurt for the buyer to preemptively know their stuff when it comes to condo resale disclosure documents. These documents could make or break a deal.
The Virginia Condominium Act
The Virginia Condominium Act states that after a buyer is in contract to buy a condo, the seller must provide the buyer with the condo resale disclosure package within 14 days. The condo resale disclosure package contains a ton of important information for a prospective condo buyer. These documents include the financial history of the condo association, its bylaws, records of any pending lawsuits, a statement of any or all unpaid fees associated with the unit in question, and other legal documents.
The purpose of the Virginia Condo Act is to inform and protect the buyer in a condo sale. The law gives a potential condo buyer three days upon receiving the disclosure documents to call off the contract and walk away from buying the condo. If the buyer acts on this legal right, the seller must refund the buyer’s deposit in full and accept that the deal is off, no questions asked. In these cases, the seller is powerless to do anything about the buyer’s change of heart.
So why is it possible for a condo buyer to exit a contract they’ve already agreed to after receiving the condo resale disclosure documents? Read on to find out.
A Condo Buyer’s Right to Rescission
In a condo sale, the buyer’s right to terminate a contract they’ve already signed after receiving copies of the resale disclosure documents is known as the buyer’s right to rescission. This right is mandated by Virginia state law and designed to protect the buyer’s interests in a condo sale. The resale disclosure documents contain important information regarding the condo’s rules and regulations, the financial and legal status of the condo’s homeowners association, and a list of all the seller’s unpaid fees and charged violations. This type of information can prove invaluable to condo buyers because it will help them make a final decision on buying the unit or walking away from the deal altogether. That’s why it is so important for buyers and agents in Virginia to be familiar with the laws, so they don’t miss the opportunity to learn more about a property before the purchase is final.
Condo resale disclosure packages can be hundreds of pages of documents. It can be tough to wade through all of that paperwork in only three days, but when you have an expert real estate agent or team on your side, they will know exactly what to look for in the disclosure package. Just in case — and for your own benefit — take a look at the most important things condo buyers should look for when reviewing the condo resale disclosure documents.
What Should Condo Buyers Look for In the Resale Disclosure Package?
The most important things for condo buyers to look for in the condo resale disclosure documents are:
- Lawsuits: Buyers need to find out if there are any pending lawsuits against the condo’s homeowners association because that can result in higher fees for each condo owner down the road. Legal trouble can also alert a buyer to problems other condo owners may have with that particular condo association, problems that a prospective buyer may not want to deal with once they become the lawful owner. Lawsuits are not a deal breaker and are sometimes over very small issues, but they are important for you and your lender to know about beforehand.
- Special Assessments: Special assessments are extra fees a condo owner may be responsible to pay in order to help the condo association pay off its debts or cover a project that wasn’t part of the predetermined annual budget. Examples include a new pool or gym. Legal fees may also be an example of a special assessment.
- Condo Policy Violations: Buyers should look for any recorded instances of policy violations by the current owner like unapproved renovations or failure to obey by the pet policy. Once the buyer becomes the lawful owner of the condo unit, these violations will become his or her responsibility to rectify and it could cost the buyer extra cash.
- Homeowners Association’s Financial Status: It is very important for buyers to investigate the condo association’s financial status because the state of the association’s budget and reserve fund can foreshadow future special assessments for the unit owners. You want to be sure that a condo association has saved up enough money to cover any unpredicted repairs, especially if its an older building. Your lender will also be looking into this to ensure that they are comfortable with the reserves in the building too, which often gives buyers peace of mind. If a lender is willing to lend money in a building, then they have confidence that the reserves are enough to continue keeping the building in good condition and addressing any issues that may come up.
The Bottom Line
The bottom line on condo resale disclosure documents is that these documents are vitally important resources for prospective condo buyers. Condo buyers in Northern Virginia need to be familiar with the disclosure laws, understand the right to rescission, and know what to look for in the resale package to be successful. If you are thinking about buying a condo in Virginia, contact the Keri Shull Team! Work with the best real estate team in Virginia to be a successful condo buyer on your first try.