CCS Condominium Document Review & Due Diligence

Question 1

What is the primary governing document of a condominium association that is recorded with the local government to legally establish the condominium?

Accepted Answer

Declaration of Condominium

Answer

Articles of Incorporation

Answer

Bylaws

Answer

Rules and Regulations

Question 2

Which document in a condominium's governing package establishes the procedures for electing the board of directors and conducting association meetings?

Accepted Answer

Bylaws

Answer

Declaration of Condominium

Answer

Site Plan

Answer

Rules and Regulations

Question 3

What is the primary purpose of conducting a document review during condominium due diligence?

Accepted Answer

To identify potential risks, obligations, and restrictions before purchase

Answer

To negotiate a lower purchase price

Answer

To obtain mortgage pre-approval

Answer

To transfer title to the buyer at closing

Question 4

Which of the following would typically be found in a condominium's Rules and Regulations but NOT in the Declaration?

Accepted Answer

Pet weight limits and breed restrictions

Answer

Unit boundary descriptions

Answer

Percentage of common element ownership per unit

Answer

The association's legal name

Question 5

What is a 'resale package' or 'resale certificate' in a condominium transaction?

Accepted Answer

A package of association documents and financial information provided to prospective buyers

Answer

A document showing the unit's complete sales history

Answer

A seller disclosure about known structural defects

Answer

A certificate of occupancy issued at the time of original sale

Question 6

During due diligence, why is it important to review the condominium association's most recent audited financial statements?

Accepted Answer

To assess the association's financial stability and potential for future special assessments

Answer

To determine the unit's current market value

Answer

To calculate the buyer's property tax liability

Answer

To verify the seller's outstanding mortgage balance

Question 7

What does it mean when a condominium project is 'FHA-approved'?

Accepted Answer

The condominium meets HUD guidelines making units eligible for FHA-insured mortgages

Answer

The building was constructed using federal housing funds

Answer

The association has obtained federal tax-exempt status

Answer

The project has been inspected and certified by federal safety inspectors