Who knew
WASHINGTON DC CONDOS

Who knew there was soooo much to know about purchasing DC condos, and reviewing DC condo documents? Well don't worry, we've compiled a page of resources and 'need to know' information you can use when the time comes. Reach out when you have a question, or you're ready to get started!

ABOUT WASHINGTON DC CONDOS
  • A condominium isn’t a certain type of building or architecture. It can take many different shapes and forms. Primarily, it’s ownership of an individual share in an owner’s association. The definition of a condo “unit” is defined in the governing documents. It can be anything from a commercial or industrial building to a boat dock;
  • You’ll have a deed to the unit, which you will own, and an interest in the common elements.;
  • You’ll pay association dues and abide by the rules and restrictions set forth in the CC&Rs.;
  • A standard mortgage loan can be used to purchase a condominium;
  • Most buyers are familiar with condominiums in Washington DC, but not necessarily with the process of reviewing DC condo documents.
    It’s important to review your DC condo documents carefully to ensure that the financial state of the association is good, and that you can live with the condo association rules and regulations. Your real estate agent can’t review them for you. Real estate agents are not lawyers or CPAs. It’s up to you to read and understand the association documents, and to ask questions of the appropriate experts when you don’t. If you have questions about DC condo documents, the budget and/or reserves, seek answers from the association and the advice of a real estate attorney or CPA.
DC CONDO ACT
For a quicker review, review this synopsis: Synopsis of 2014 DC Condo act Amendment WP Also, in 2014, the DC Condo Act was amended. Amendment to the DC Condo Act
RIGHT OF RESCISSION

It’s the law. The DC Condo Act (reference your purchase agreement) essentially gives buyers the right to review association documents and/or resale certifications for a specified number of days from date of receipt and withdraw from a Washington DC condo or co-op transaction should they not agree with the rules and regulations. In Washington DC:

  • New condos are afforded a 15 day right of rescission from the date of receipt of the public offering statement package.
  • Resale condos are afforded 3 business days beginning the day following the date of receipt of the resale package.
  • Although developers aren’t required to provide a right of rescission for association documents on fee simple products such as single family attached or detached homes, they may opt to do so. Be sure to ask before signing a contract. If there is no rescission clause, try to negotiate one.
  • Resale buyers are protected on fee simple purchases by the HOA disclosure in the GCAAR real estate contract. It requires sellers to provide buyers with HOA documents by the 10th day following ratification. The buyer has 3 business days for right of rescission.
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WHAT YOUR WASHINGTON DC CONDO DOCUMENT PACKAGE SHOULD INCLUDE

The shortlist, in layman's terms:

  • Current budget and financial condition, reserve funds
  • Current Bylaws, architectural guidelines and CC&Rs (Covenants, Conditions and Restrictions) that define the rules and regulations for unit owners and co-op shareholders
  • Association Fee Breakdown
  • Insurance coverage requirements for unit owners and Master Insurance Policy coverage
  • Occupation limitations (number of people who may occupy a unit)
  • Statement of unpaid fee assessments, special assessments, and/or upcoming assessments
  • Records of any pending legal action or judgements by or against the association
  • Certification of filing for the association’s annual report to state board (some associations exempt)
  • Records of approved alterations to the unit
  • Violation notices to current unit owner(s)
TMI
THE LONG LONG LONG LIST

TLDR

From the DC Condo Act: Section 42-1904.04. Public offering statement; form prescribed by Mayor; contents; use in promotions; material change in information and amendment of statement. (a) A public offering statement shall disclose fully and accurately the characteristics of the condominium and the units therein offered and shall make known to prospective purchasers all unusual and material circumstances or features affecting the condominium. The proposed public offering statement submitted to the Mayor shall be in a form prescribed by his rules and shall include: (1) The name and principal address of the declarant and the condominium; (2) The applicant’s name, address, and the form, date, and jurisdiction of organization, the address of each of its offices in the District of Columbia, the names and addresses of all general partners if applicant is a partnership, and all directors and owners of 10 percent or more of the beneficial interest in the stock of applicant if applicant is a corporation; (3) To the extent that such information is reasonably available to applicant, the names and addresses of the attorney primarily responsible for the preparation of the condominium documents, the general contractor, if any, all contractors who are primarily responsible for the construction, reconstruction or renovation of the electrical, plumbing or mechanical systems or the roof of the condominium, and the architect and engineer primarily responsible for the design, construction or renovation of the condominium; (4) A general narrative description of the condominium stating the total number of units in the offering; the total number of units planned to be sold and the number of units to be rented; the total number of units that may be included in the condominium by reason of future expansion or merger of the project by the declarant; (5) A copy of the condominium instruments, with a brief narrative statement describing each and including: (A) Information on declarant control; (B) A projected budget for at least the first year of the condominium’s operation (including projected common expense assessments for each unit); (C) Provisions for enforcement of liens for assessments; (D) A statement of the amount, or a statement that there is no amount, included in the projected budget as a reserve for repairs and replacement; (E) The estimated amount of any initial or special condominium fee due from the purchaser on or before settlement of the purchase contract and the basis of such fees; (F) A description of any restraints on alienation; and (G) A description of any service not reflected in the proposed budget that the declarant shall provide or expenses that he or she shall pay, and that he or she expects may become, at any subsequent time, a common expense of the unit owners’ association, and the projected common expense assessment attributable to each of those services or expenses for the association and for each type of unit; (6) Copies of the deed that shall be delivered to a purchaser to evidence his or her interest in the unit and of the contract of sale that a purchaser shall be required to sign; (7) A copy of any management contract, lease of recreational areas, and any other contract or agreement substantially affecting the use or maintenance of, or access to all or any part of the condominium with a brief narrative statement of the effect of each such agreement upon a purchaser, the condominium unit owners and the condominium, and a statement of the relationship, if any, between the declarant and the managing agent or firm; (8) A general statement of: (A) The status of construction; (B) The project’s compliance with zoning, site plan and building permit regulations; (C) Source of financing available and the estimated amount necessary to complete all improvements shown on the plats and plans as “not yet completed” or “not yet begun” which declarant is obligated to complete; and (D) The projected date of completion of construction or renovation of the major amenities of the condominium; (9) The significant terms of any encumbrances, easements, liens and matters of title affecting the condominium; (10) The significant terms of any financing offered by or through the declarant to purchasers of units in the condominium; (11) The provisions and any significant limitations of any warranties provided by the declarant on the units and the common elements, other than the warranty prescribed by Section 42-1903.07(b); (12) A statement that the contract purchaser of a condominium unit may, prior to conveyance, cancel the purchase transaction within 15 days following the date of execution of the contract by the purchaser or the receipt of a current public offering statement, whichever is later; (13) A statement as to whether or not the condominium satisfies, or is expected to satisfy, the special requirements pertaining to condominiums established by federal, federally chartered or District of Columbia institutions which insure, guarantee or maintain a secondary market for condominium unit mortgages; and (14) Additional information required by the Mayor to assure full and fair disclosure to prospective purchasers. (15) Repealed. (a-1) If the declaration provides that ownership or occupancy of the units are or may be owned in time-shares, the public offering statement shall disclose in addition to the information required by subsection (a) of this section: (1) The total number of units in which time-share estates may be created; (2) The total number of time-share estates that may be created in the condominium; (3) The projected common expense assessment for each time-share estate and whether the assessment may vary seasonally; (4) A statement that shall include: (A) Any service that the declarant shall provide or any expense that the declarant shall pay, if the service or expense is not reflected in the budget and the declarant expects that the expense or service may later become a common expense of the unit owners’ association; and (B) The projected common expense assessment attributable to any expense or service listed pursuant to subparagraph (A) of this paragraph for each time-share estate; (5) Repealed; (6) The extent to which the time-share owners of a unit are jointly and severally liable for the payment of real estate taxes and all assessments and other charges levied against the unit; (7) The extent to which a suit for partition may be maintained against a unit owned in time-share estates; and (8) The extent to which a time-share estate may become subject to a tax or other lien that arises out of claims against other time-share owners of the same unit. (b) The public offering statement shall not be used for any promotional purposes before registration of the condominium project and afterwards only if it is used in its entirety. No person may advertise or represent that the Mayor approves or recommends the condominium or disposition thereof. No portion of the public offering statement may be underscored, italicized, or printed in larger or heavier or different color type than the remainder of the statement if such emphasis is intended to mislead the prospective purchaser or to otherwise conceal material facts, except that there may be a cover sheet for such public offering statement using such design, pictures and words as the Mayor may deem reasonable. The form, content, and layout of the public offering statement shall be subject to approval by the Mayor. (c) The declarant shall file with the Mayor a statement of any material change in the information contained in the public offering statement. Such statement shall be filed within 15 days after the date on which the declarant knows or should have known about the change. The Mayor may require the declarant to amend the public offering statement if necessary to assure full and fair disclosure to prospective purchasers. A public offering statement is not current unless any necessary amendments are incorporated therein or attached thereto. Such amendments must be mailed by United States registered mail, return receipt requested. Such receipt shall be kept on file for review. (d) The provisions of this section shall be deemed to be compliedwith if the public offering statement filed pursuant to the provisions of paragraph (9) of subsection (a) of this section is for offers of units currently registered as securities with the Securities and Exchange Commission. (e) In the case of a condominium situated wholly outside the District of Columbia, an application for registration or a proposed public offering statement filed with the Mayor, which has been approved by an agency in the state where the condominium is located and substantially complies with the requirements of this chapter, may not be rejected by the Mayor on the grounds of noncompliance with any different or additional requirements imposed by this chapter or by rules and regulations issued by the Mayor pursuant to this chapter. The Mayor may require additional documents or information in a particular case to assure adequate and accurate disclosure to prospective purchasers. Section 42-1904.08. Conversion condominiums; additional contents of public offering statement; notice of intent to convert; tenant’s and subtenant’s right to purchase; notice to vacate. (a) Any declarant of a conversion condominium shall include in hispublic offering statement, in addition to the requirements of Section 42-1904.04: (1) Repealed. (2)(A) A statement by the declarant based upon a report of a qualified architect or engineer as to the present condition of all structural components and major utility installations in the condominium. The statement shall include: (i) The approximate dates of construction, installation, and major repairs of structural components and major utility installations and a general description of each installed system as particularly suitable or unsuitable for use in a conversion condominium; (ii) An evaluation of the adequacy of each system to perform its intended function both before and after completion of the condominium conversion; and (iii) The estimated life of the system components, and the estimated cost (in current dollars) of replacing each component that has a rated life that is evaluated to be less than the rated life of the entire structure. (B) The architect’s or engineer’s report upon which the statement required by this subsection is based shall be filed with the Mayor as a part of the application for registration. (b) In the case of a conversion condominium: (1) The declarant shall give each of the tenants or subtenants of the building or buildings which the declarant submits to the provisions of this chapter at least 120 days notice of the conversion before any such tenant or subtenant may be served with notice to vacate. Such notice of conversion shall be given no sooner than 10 days after the date the declarant’s application for registration of the condominium units is approved. The notice shall be in such form as the Mayor may require and shall set forth generally the rights of tenants and subtenants pursuant to this section. Such notice shall be hand – delivered or sent by United States mail, return receipt requested. Such notice shall contain a statement indicating that such notice shall not be construed as abrogating any rights any tenant may have under a valid existing written lease; (2)During the first 60 days of the 120-day notice period, each of the tenants who entered into an agreement with declarant or declarant’s predecessor in interest to lease the apartment unit shall have the exclusive right to contract for the purchase of such apartment unit. If the tenants do not contract for the purchase of their apartment unit, during the second 60 days of such 120-day period, each of the subtenants, if any, who occupy the apartment unit under an agreement with the tenants shall have the exclusive right to contract for the purchase of such apartment unit. The exclusive right to contract for the purchase of such apartment units shall be on terms and conditions at least as favorable to the tenants or subtenants as those being offered by declarant to the general public. The right to contract for purchase granted to the tenants and subtenants, if any, of an apartment unit shall be granted only where the tenant or subtenant has remained, and on the date of the notice is, in substantial compliance with the terms of the lease or sublease agreement, and if such apartment unit is to be retained in the conversion condominium without substantial renovation or alteration in its physical layout. If there is more than 1 tenant, then each such tenant shall be entitled to contract for the purchase of a proportionate share of the apartment unit and of a proportionate share of the share of any tenant who elects not to purchase. If the tenants do not contract for the purchase of the apartment unit and if there is more than 1 subtenant occupying the apartment unit, then each such subtenant shall be entitled to contract for the purchase of a proportionate share of the apartment unit occupied, and of a proportionate share of the share of any subtenant who elects not to purchase. In no case shall this subsection be deemed to authorize the purchase of less than the entire interest in the apartment unit to be conveyed; (3) If the notice of conversion specifies a date by which the apartment unit shall be vacated, then such notice shall constitute and be the equivalent of a valid statutory notice to vacate. Otherwise, the declarant shall give the tenant or subtenant occupying the apartment unit to be vacated the statutory notice to vacate where required by law in compliance with the requirements applicable thereto. (c) Each declarant of a conversion condominium shall assure that the budget established for the unit owners’ association and upon which common expense assessments are made shall include an adequate provision for reasonable reserves to cover future maintenance, repair, or replacement costs associated with the common elements.
Resale Requirements Section 42-1904.11. Resale by unit owner; seller to obtain appropriate statements from association and furnish to purchaser; scope of provisions. (a) In the event of a resale of a condominium unit by a unit owner other than the declarant, the unit owner shall obtain from the unit owners’ association and furnish to the purchaser, on or prior to the 10th business day following the date of execution of the contract of sale by the purchaser, a copy of the condominium instruments and a certificate setting forth the following: (1) Appropriate statements pursuant to Section 42-1903.13(h) and, if applicable, Section 42-1903.15, which need not to be in recordable form; (2) A statement of any capital expenditures anticipated by the unit owners’ association within the current or succeeding 2 fiscal years; (3) A statement of the status and amount of any reserves for capital expenditures, contingencies, and improvements, and any portion of such reserves earmarked for any specified project by the executive board; (4) A copy of the statement of financial condition for the unit owners’ association for the then most recent fiscal year for which such statement is available and the current operating budget, if any; (5) A statement of the status of any pending suits or any judgments to which the unit owners’ association is a party; (6) A statement setting forth what insurance coverage is provided for all unit owners by the unit owners’ association and a statement whether such coverage includes public liability, loss or damage, or fire and extended coverage insurance with respect to the unit and its contents; (7) A statement that any improvements or alterations made to the unit, or the limited common elements assigned thereto, by the prior unit owner are not in violation of the condominium instruments; (8) A statement of the remaining term of any leasehold estate affecting the condominium or the condominium unit and the provisions governing any extension or renewal thereof; and (9) The date of issuance of the certificate. (a-1) (1) If the condominium instruments and certificate prescribed pursuant to subsection (a) of this section are not furnished to the purchaser on or prior to the 10th business day following the date of execution of the contract of sale by the purchaser, the purchaser shall have the right to cancel the contract by giving notice in writing to the seller prior to receipt of the condominium instruments and certificate, but not after conveyance under the contract. (2) Except as provided pursuant to paragraph (5) of this subsection, the purchaser shall have the right for a period of 3 business daysfollowing the purchaser’s receipt of the condominium instruments and certificate prescribed pursuant to subsection (a) of this section, whether or not such receipt occurs within the time period described in subsection (a) of this section, to cancel the contract by giving notice in writing and returning the condominium instruments and certificate to the seller, provided that the purchaser may not so cancel the contract after conveyance under the contract. (3) If the purchaser cancels the contract pursuant to paragraph (1) or (2) of this subsection, the purchaser shall receive back any earnest money or other deposit without delay or deduction. (4) From and after the earlier of (i) the expiration of the 3 business-day period for review prescribed pursuant to paragraph (2) of this subsection, or an extension of the 3 business-day period agreed to by the parties in a signed writing, or (ii) conveyance under the contract, if the purchaser has not exercised the right to cancel, the contract shall not be cancellable by the purchaser under this subsection. (5) If the condominium instruments and certificate are furnished to the purchaser on or prior to execution of the contract of sale by the purchaser, the 3 business-day period for review prescribed pursuant to paragraph (2) of this subsection shall commence when the contract is executed by the purchaser. (b) The principal officer of the unit owners’ association or suchother officer or officers as the condominium instruments may specify, shall furnish the certificate prescribed by subsection (a) of this section upon the written request of any unit owner or purchaser within 10 days of the receipt of such request. (c) Subject to the provisions of Section 42-1904.01, but notwithstanding any other provisions of this chapter, the provisions and requirements of this section shall apply to any such resale of a condominium unit created under the provisions of Chapter 20 of this title.
The DC Condo Act  Condo Association Bill of Rights

Smaller associations and self-managed associations may not offer the same packages as larger, professionally managed associations.

Pondering
WARRANTY ON NEW DC CONDOMINIUMS

If you're purchasing a new condominium in DC, be aware that the typical structural warranty runs only 2 years from the date of the first sale. Read our article on DC Condo Associations, structural warranties and remedies for defects.

Condo Associations
RULES OF THUMB
Compliance

Is the current unit owner in compliance with the rules of the association, has he/she any outstanding fines, condo dues or special assessment payments?  If so, make sure you stipulate that these be brought current at the seller’s expense and shown as such on your HUD-1 (settlement statement), or you could become liable for them. Ask if any improvements or alterations have been made to the unit and, if so, if they are in compliance with board/association regulations and standards. You want to make sure they’re not in violation, or you could inherit any liability/penalties.

Review Budget
Important Questions

It is important to ask the association or management representative (in writing, and get a written response) if the association is involved in any planned, pending or unresolved litigation. This can affect the ability of mortgage lenders to lend against the property. It is also important to ask about the association’s investor ratio (ratio of renters vs owners), the square footage  percentage of commercial property associated with the association (retail components) and percentage of delinquent dues by owners (as well as the length of time they are delinquent). All are subject to percentage caps that can render a building unwarrantable (unlendable). You’ll also want to verify that the current owner is up-todate on dues and learn the percentage of owners delinquent on dues. Ask about planned or levied special assessments as well as major improvements being discussed for the next one to three years. Ask if any improvements or alterations have been made to the unit and if they are in compliance with board/association regulations and standards, obtained the proper permitting if required and were inspected, if required. You will inherit violations and associated fines/penalties if not. Other questions include restrictions for pets, rentals and smoking, as well as the rental cap, if any, and waiting list length. Check to see what the policies and fees are for move-ins and ask about the amount of capital contribution, if any.

Special Assessments

This disclosure should be included in your purchase agreement provisions and your agent likely checked the box that says the seller will be responsible, but make sure. Your lender will request a Condo Questionnaire that should pose this question, also. Ask your lender for a copy. Surprisingly, condo owners are not always aware that there are special assessments pending, so even if they answered ‘no’ to the question on your purchase agreement, it’s important to read the resale certificate package and the condo questionnaire. These are “official” responses. Liens and Judgements During the contract process your agent should have specifically asked about liens and judgements. At any given time, there are a number of developer marketed properties with mechanics liens against them, and privately-owned properties can have these, too. If there are liens against the association and unit, it could make it difficult or impossible to get financing and the payoff of liens and judgements can result in higher condo fees and special assessments. Be sure to get all documentation if there are liens, and take it to your selected title company and lender for review.

Budget

Examine expenditures in the budget, and volume of reserves. New condos often haven’t built up large reserves just from capital contributions, developers often are supressing the condo dues while they’re selling, as well as keeping the budget lean until the homeowners take over the association. There are many reasons for this, but the bottom line is that it’s important to realize that expenses and condo dues are likely to increase-sometimes significantly-when the unit owners take control of the association. This typically occurs when the project is 70% to 75% sold.  Check to see if the condo dues have increased, how often, and by how much. Is there an annual cap on raises? In older communities the reserves may have been depleted by costly repairs, unpaid dues, and community expense increases as amenities age and staff and services become more expensive over time. When reserves are low and major repairs are needed, the unit owners are typically assessed for the costs in shares based on the unit size. Does the association have sufficient reserves for repairs? Especially in older condo buildings, this is important. Lawsuits or judgments pending against or involving the condo association can also be a source of condo fee increases and special assessments. Ask for copies of association meeting minutes for the past 6 meetings. Review them for discussions of expenditures, repairs, legal proceedings and other issues that might shed light on the association’s future spending and assessment plans.

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VIRGINIA CONDO RESCISSION PERIOD

The Virginia Condo Act (reference your purchase agreement) essentially gives buyers the right to review public offering statements, association documents and/or resale certifications for a specified number of days from date of receipt and withdraw from the transaction within that time should they not agree with the rules and regulations or approve of the associations budgetary or finacial data. Right of Rescission in Virginia (these rules can be updated from time to time, so be sure to check for new rules and revisions to old ones):

  • New Condos: 10 days from day of receipt Under Virginia Law a purchaser of a condominium unit is afforded a ten day period during which he or she may cancel the contract of sale and obtain a full refund of any sums deposited in connection with the contract. The ten day period begins running on the contract date or the date of delivery of a Public Offering Statement, whichever is later. The purchaser should inspect the condominium unit and all common areas and obtain professional advice. If the purchaser elects to cancel, he or she must deliver notice of cancellation to the declarant by hand or by United States mail, return receipt requested;
  • Resale condos: 3 calendar days from date of receipt of resale package.
  • Virginia Condominium Act Section 55-79.97: The statute as amended states that a purchaser of a condominium unit may cancel a sales contract within 3 days of being notified that the resale certificate will not be available, and the amendments define when a resale certificate shall be deemed not to be available. Specifically, a resale certificate is not available when: (a) a current annual report has not been filed by the unit owners’ association with either the State Corporation Commission pursuant to § 13.1-936 or the Common Interest Community Board pursuant to § 55-79.93:1, (b) the seller has made a written request to the unit owners’ association that the resale certificate be provided and no resale certificate has been received within 14 days in accordance with subsection C of the statute, or (c) written notice has been provided by the unit owners’ association that a resale certificate is not available. Section 55-79.97(F) was also amended to make it clear that a resale certificate need not be provided if there is a disposition of the unit by a sale at an auction when a resale certificate was made available as part of the auction package for prospective purchasers prior to the auction.
VA CONDO ACT2017 CHANGESVA HOA LAW BLOG