Placing an offer on any property can be complex for buyers, and condominiums present additional considerations. Condos often involve rules, regulations, fees and disclosure requirements that buyers should understand before submitting an offer. The following are five key issues to consider when using the WB-14 Residential Condominium Offer to Purchase.
Buyer recission rights relating to condo disclosure materials
Condominium disclosure materials are a critical factor in a buyer’s decision to proceed with an offer. These materials provide important information about the condominium association, the property as a whole, and any fees or obligations that may not be known at the time of offer.
To ensure adequate review, buyers are granted rescission rights after receiving the required disclosure materials. Buyers may rescind their offer within five business days of receiving the disclosure materials or notice of a material change in those materials. If a buyer elects to rescind, the rescission must be done in writing, and no reason is required.
Buyers may also request additional condominium information by including the Contingency for Additional Condominium Information in the WB-14 Residential Condominium Offer to Purchase. The additional information might include board meeting minutes, financial statements and information regarding special assessments. If a buyer includes this contingency, the buyer can rescind their offer within five business days of receiving the requested materials. These rights are intended to ensure buyers have sufficient information and time to evaluate the condominium before being bound to the contract.
Limited common elements
Another important consideration in condominium transactions is the treatment of limited common elements. Limited common elements are portions of the condominium property that are part of the common elements but are reserved for the exclusive use of one or more unit owners, rather than the association as a whole. Common examples include storage lockers, balconies, patios, and other appurtenant areas or facilities assigned for exclusive use.
In practice, these elements are often treated as part of the overall unit package and may be relevant to various offer provisions, including inspection contingencies, maintenance responsibilities and provisions addressing damage occurring between acceptance and closing.
While the declaration and condominium plat typically govern the identification and assignment of limited common elements, buyers and their agents may wish to review available association materials to understand which areas or features are associated with a particular unit. These elements can materially affect utility, enjoyment and market value and should be considered in the buyer’s overall evaluation of the property.
Contingency for additional condominium information
As referenced earlier, the WB-14 Residential Condominium Offer to Purchase includes a contingency permitting the buyer to obtain additional condominium information beyond the statutorily required disclosure materials. While sellers are obligated to provide a defined set of condominium disclosures, buyers may require more detailed or targeted information to complete their due diligence.
This contingency allows the buyer to request, among other items, association financial statements, minutes of board and unit owner meetings, inspection reports relating to common elements, and information regarding pending or threatened litigation involving the association. The contingency also includes an “other” category, providing flexibility for buyers to request additional documentation relevant to the property or association governance.
From a practice standpoint, this provision functions as a tool of due diligence, enabling buyers and their agents to obtain and review information necessary to assess the financial condition, operational stability and potential risk exposure of the condominium association prior to proceeding to closing.
Common elements, storage and parking
When a buyer submits an offer on a condominium, the purchase price often reflects not only the unit itself but also access to associated common elements and amenities. These may include parking facilities, fitness centers, lobbies and other shared building features that enhance the overall use and value of the property.
In addition, some condominiums provide limited common elements or assigned rights such as storage lockers for exclusive use by individual unit owners. These features can vary significantly between properties and should be carefully evaluated as part of the overall offering.
Because amenities and assigned uses can materially affect both value and marketability, they should be incorporated into the buyer’s pricing analysis and decision-making. Licensees may assist clients in confirming which amenities are included in the purchase price, as well as identifying any separate fees, assessments or usage costs that may impact the buyer’s overall financial commitment.
Unit transfer fee
Condominium units may be subject to transfer fees imposed by a condominium association, homeowners association or other governing entity upon the transfer of ownership. These fees should be accounted for by buyers when evaluating overall acquisition costs and structuring offers.
Transfer fees can impact a buyer’s closing costs and should be clearly identified early in the transaction. In many cases, sellers may agree to pay the fee as part of negotiations; however, responsibility is not automatic and should be expressly addressed in the offer to purchase. The WB-14 Residential Condominium Offer to Purchase includes a provision that allows the buyer and seller to negotiate responsibility for the payment of a transfer fee.
Licensees may wish to confirm with the listing side whether a transfer fee applies, the amount of any such fee, and the party responsible for payment, to help ensure clarity and reduce the likelihood of misunderstandings at closing.
For additional information, see the WRA’s condo law resources webpage.
