What is the condo docs and budget review contingency?
The short answer is that the condo docs and budget review contingency
is a standard contingency in an offer on a condominium.
In Cambridge and Somerville, the majority of buyers are purchasing condominiums. An offer on a condominium typically includes a condo docs and budget review contingency that looks something like this:
For an offer on a condominium, a condo docs and budget review contingency - with said review to be completed by the time of the signing of the purchase and sale - is a standard contingency. In my own experience, I cannot imagine that this contingency being removed will be the deciding factor for a seller in a multiple offer situation. It is a standard contingency. That being said, some buyers are removing the condo docs and budget review contingency from their offers. Amazing!
The fact of the matter is that when an offer is made, it is not always the case that all the documents governing the operation of the condominium of which the property is a part AND the current budget/financials for the association are readily available to the prospective buyer.
Even if all the documents and financial reports are available, the prospective buyer very likely lacks the expertise to conduct a proper review of these items. In our marketplace, the norm is for a Buyer to retain a buyer's real estate attorney after offer acceptance. One of the first and most important tasks a buyer's attorney undertakes for a Buyer with an accepted offer on a condominium is the review of the condo docs and budget. This takes time.
As an experienced agent involved in many condominium transactions since 1999, I have seen offers without a condo docs and budget review contingency. It never ceases to amaze me when this contingency is left out of an offer on a condominium. I don't recommend leaving this contingency out of an offer on a condo. Interestingly enough, buyer agents who work in markets that don't include many condominiums sometimes forget to include the condo docs and budget review contingency in an offer on a condominium. Not good! The condo docs and budget review contingency is an important contingency, because reviewing the condo docs and budget is important step in the process of purchasing a condo.
It is not uncommon for a buyer's real estate attorney to conduct a condominium document and budget review for a buyer client without a condominium documents and budget review contingency in their accepted offer. Remember, though, that in this scenario the Buyer cannot exit the transaction based on the condo docs and budget review, as the Buyer's offer does not include a condo docs and budget review contingency. Again, not good!
What if the condo you are making an offer on is part of a new condo conversion or a new construction unit and the condo docs and budget are not ready yet? Good question! You still would want to include a condo docs and budget review contingency. Indeed, one could make an argument for the condo docs and budget review contingency being even more important in this scenario. If the condo docs and budget are not ready by the time of the signing of the purchase and sale agreement, the condo docs and budget review contingency survives in the purchase and sale agreement. Typically, the Buyer and the buyer's attorney enjoy something like a seven-day period of review once the condo documents are conveyed. It's fairly typical for there to be some back and forth on the language in the condo docs when it is a new conversion or a new construction association, unless it's a much larger association and the condo docs are already in final form and have been recorded.
Cambridge and Somerville have been hot real estate markets since the middle of 2012. Multiple offer situations are quite common. Many buyers are dropping contingencies from their offers to make them more attractive to sellers. If you are making an offer on a condominium, I strongly encourage you to preserve the condo docs and budget review contingency in your offer. In my own experience as a top agent, I have never seen the condo docs and budget review contingency be the deciding factor in a seller's decision-making regarding which offer to accept. The condo docs and budget review contingency is a standard and important contingency in an offer on a condominium. The norm is for the the condo docs and budget review to be completed the the signing of the purchase and sale agreement. If you are a Buyer, give yourself and your real estate attorney that much time to review the condo docs and budget. It's important.
I help Buyers BUY and Sellers SELL in Cambridge and Somerville, MA. Here to help you. Let's talk.
Call me at 617-733-8937 or email me.
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