1. Gather the Documents That Reveal Potential Costs
Monthly dues do not show the full cost of a condominium purchase. Start with dated financial disclosures, governing documents, and assessment statements. These records show current charges, expected expenses, and plans to fund major work.
Separate Required Disclosures from Additional Requests
Civil Code § 4525 generally requires a seller to provide specified association documents to a prospective purchaser. These include governing documents, recent annual disclosures, current assessments, unpaid unit charges, and approved assessment changes that are not yet due. A condo lawyer reviewing these condominium law disclosures should distinguish approved charges from predictions about future assessments. If the package has only a summary, request the full reserve study through the seller. Project estimates may require separate requests.
Request Board Minutes and Applicable Inspection Reports
If the buyer requests them, § 4525 includes approved board meeting minutes from the previous 12 months, excluding executive sessions. Look for discussions about roofs, elevators, balconies, and postponed work. The package also includes the latest applicable § 5551 inspection report. That report covers qualifying exterior elevated elements, not the entire building. Compare any recommended repairs with subsequent minutes to determine whether the board obtained estimates, approved work, or identified funding.
2. Read Reserves against the Work the Building Needs
Reserve funds help pay for major components the association must maintain or replace. A large balance can still leave a shortfall if several costly components need attention together.
Compare Component Costs, Remaining Life, and Available Reserves
Civil Code § 5550 generally requires a reserve study with a visual inspection at least every three years when its statutory cost threshold applies, plus annual review and necessary adjustments. Read the study’s date, component inventory, estimated remaining life, and replacement costs together. Then compare its assumptions with newer bids or inspection findings. For a residential real estate purchase, a reserve percentage alone cannot establish affordability. The same percentage can represent different risks depending on the timing of major expenses.
Check Deferred Repairs and the Funding Plan
The annual budget report under § 5300 addresses reserve funding, certain deferred repairs, anticipated special assessments, and specified outstanding loans. A condo attorney can review whether those disclosures explain how the association intends to cover upcoming expenses. A plan may depend on higher regular dues, borrowing, or future assessments rather than money already available. Check actual contributions against the funding plan and ask why the board postponed work. Deferral may delay payment while allowing repair needs or costs to increase.
3. Distinguish Approved Assessments from Projects Still under Review
A proposed project, an anticipated assessment, and an approved charge represent different stages. A statement showing no current special assessment does not resolve whether the association expects to impose one for work already under discussion.
Match Assessment Notices to Board Decisions
For an approved assessment, check the total, the unit’s share, payment dates, and installment options. A condo lawyer can compare the notice with the approval record and the association’s written assessment statement. Civil Code § 5605 generally requires approval by a majority of a quorum of members when aggregate special assessments exceed 5% of the association’s budgeted gross expenses for that fiscal year, subject to statutory exceptions, including qualifying emergencies under § 5610. That threshold concerns approval authority. It does not cap a buyer’s potential financial exposure at 5% of the unit’s value or annual dues.
Trace Proposed Work through Minutes and Estimates
Trace proposed work through inspections, bids, and funding proposals. Check the scope, estimate dates, and any scheduled assessment vote. An early estimate may omit engineering, permits, or additional damage discovered during construction. Avoid dividing a preliminary project total equally among units without checking the allocation provisions. The governing documents may assign different shares, and the association may fund part of the project from reserves or borrowing.
4. Resolve Open Cost Questions before Closing
Turn the document review into specific written questions before accepting the remaining financial risk. Identify the amount that is known, the work still being priced, and the funding assumptions that remain uncertain. Compare those findings with the contract and the time left for review.
Confirm the Contract’S Allocation of Assessments
Do not assume the seller pays because the board approved an assessment before closing. Read the contract’s treatment of existing assessments, future installments, and charges approved during escrow. A real estate transaction may require a written amendment addressing payment, a credit, or an agreed holdback. The buyer-seller allocation does not automatically change the association’s collection rights. Confirm that the closing instructions reflect the agreement and distinguish an actual payoff from a credit that leaves later payments to the buyer.
Address Missing Records and Conflicting Information
Ask the seller to explain discrepancies and provide supporting records. For example, an assessment statement may show no approved charge while minutes describe an unfunded roof replacement. Ask for an updated statement if the board meets again before closing. If answers remain incomplete, review the contract’s document-review provisions, contingencies, notice requirements, and deadlines before proceeding. A condo attorney can review contractual choices. A building professional evaluates repair assumptions. Missing documents do not automatically create a right to cancel or recover a deposit.
30 Oct, 2026
