As Sea Level Rises, Owners and Buyers Need to Read and Understand Condo Documents, Condo Board Meeting Minutes, and Financials

As sea level continues to rise, condo buildings along the coast are confronting greater challenges. The cost of insurance is ever-increasing as is the cost of maintaining buildings that are coming into greater contact with corrosive sea water.

As a result, the days of coastal condo owners being able to buy a condo and ignore how the building its located in is being managed are over. One powerful lesson from the tragic condo collapse in Surfside, Florida, last summer — which some engineers suspect may have been in part brought about because condo owners didn’t buy in on required maintenance — is that owners can’t afford to stay out of the management loop.

Buyers, too, need to invest some time in studying how well a condo building is being managed. They need to know if owners are committed to building up the reserves necessary to pay for routine maintenance, covering the cost of unanticipated repairs, and taking the steps necessary to adapt the building and common area to prevent sea level rise flooding. They also need to know how quickly insurance costs are increasing and if there are any repairs under consideration that may lead to costly special assessments.

Condo financial statements, condo documents, the minutes from condo board meetings, and copies of correspondence between the condo board and owners are a great way to find out how committed a condo board and owners are to maintaining a building and its common area.

Owners should have easy access to all documents. Buyers, on the other hand, need to know the rights they have in the state the building is located in to acquire copies of the financials and documents, how long they have to review them, and whether or not they can withdraw an offer based on what they discover during the review period.

In states where buyers have no legal rights to review the financials and documents, they may want to request them in writing with a defined time limit for review from the seller before they submit an offer or submit an offer with a written contingency that they can withdraw the offer if they don’t like what they see.

Buyers should consult a real estate attorney regarding how to initiate this review process. They might also want the attorney to review the condo financials and documents to identify any red flags.

The seas aren’t going to stop rising any time soon. To protect their financial futures, owners and buyers need to set aside time to find out what’s really going on in a building of interest located along the coast.