CCS Condominium Document Review & Due Diligence 2

Question 1

Which of the following is a key element a buyer should examine in condominium meeting minutes during due diligence?

Accepted Answer

Discussions of pending special assessments, litigation, or major repair projects

Answer

The names and contact information of all current residents

Answer

The property management company's internal employee roster

Answer

The association's planned social and recreational event calendar

Question 2

What does the term 'percent funded' refer to when reviewing a condominium's reserve study?

Accepted Answer

The ratio of current reserve fund balance to the fully funded reserve amount

Answer

The percentage of owners who have paid their monthly dues on time

Answer

The percentage of the annual budget formally allocated to the reserve account

Answer

The proportion of the building's systems that have already been renovated

Question 3

What is a 'right of first refusal' that may appear in condominium governing documents?

Accepted Answer

The association's or existing owners' right to purchase a unit before it can be sold to an outside buyer

Answer

The association's right to reject buyers who fail a background or credit check

Answer

The seller's contractual right to refuse any offer below the original listing price

Answer

A buyer's right to cancel the purchase contract within a specified review period

Question 4

In condominium due diligence, what is the significance of reviewing the association's unit owner delinquency rate?

Accepted Answer

A high delinquency rate indicates financial stress that may increase fees or trigger special assessments for paying owners

Answer

It shows how many owners have received violation notices

Answer

It reveals the demographic breakdown and average income of unit owners

Answer

It shows the frequency with which the building has undergone formal inspections

Question 5

Which of the following best describes the purpose of condominium bylaws in relation to the Declaration?

Accepted Answer

Bylaws establish operational procedures for the association, including elections and meeting rules

Answer

Bylaws legally create the condominium and define unit boundary lines

Answer

Bylaws list the specific conduct rules and restrictions residents must follow daily

Answer

Bylaws provide the architectural and engineering plans for the building structure

Question 6

What critical information should a buyer prioritize when reviewing condominium association documents related to pending litigation?

Accepted Answer

Whether the association is a plaintiff or defendant, the nature of the claim, and potential financial exposure

Answer

The names of all parties ever involved in historical disputes

Answer

The total amount of attorney's fees paid by the association in prior years

Answer

The total number of lawsuits settled out of court in the past decade

Question 7

What is an estoppel letter (or estoppel certificate) and why is it important in a condominium transaction?

Accepted Answer

A document confirming the current status of dues owed, violations on record, and pending assessments against the unit

Answer

A letter certifying the unit has no hidden structural defects or code violations

Answer

A lender's certificate verifying the buyer's creditworthiness for the purchase

Answer

A document transferring the seller's voting rights and parking assignments to the buyer