Many people and businesses get into trouble simply by signing a contract or other document about which they know nothing. Your signature is a powerful thing and can bind you to perform the terms of a purchase agreement with little recourse if you default. I am always amazed by the number of people who sign documents and think they still have time to learn about "the deal" and weigh whether to go forward with it. TALK TO A CONDOMINIUM LAWYER FIRST. It may cost you a few hundred dollars to get some basic counsel on a contract that will cost you thousands if you get it wrong.
Get Experienced Counsel
In Virginia, like most states, there is a specific legislative act that addresses the creation and governance of condominiums. While many lawyers are generalists in real estate, you would be better served by a lawyer with experience in condominium law specifically. Condominiums are unique creatures of statute that have nuances that you should understand before signing on the dotted line. You can find good counsel with a simple web search or by referral from another lawyer you trust.
Let Your Counsel Talk You Through Your Proposed (Because You Haven't Signed Anything Yet...) Contract
As a prospective purchaser with much at stake, your lawyer will want to review (and discuss with you) any proposed contract before you sign. The developer of the condominium (whether residential or commercial) will assemble an informal offering plan (commercial condominiums) or a formal Public Offering Statement (residential condominiums) that they must give to all prospective purchasers. The offering plan or Public Offering Statement should contain the condominium Declaration, Bylaws and other documents that more particularly describe what you are getting for your money. Your attorney will need to read (as should you) all of these documents (as tedious as that may sound), understand the limitations on the property created by these documents and discern how you may use and enjoy the property if you buy. You may also want to share these documents with your lender. If certain lender protection provisions are not in the documents you may not be able to obtain financing.
Contingency for Time to Review Condominium Documents
If the seller of the property has not given you a Public Offering Statement (in a residential setting) or a Declaration and Bylaws (in a commercial setting), request one. If the seller refuses or says they do not have such documents, you should be very wary unless there is a solid explanation (i.e. the attorney is still drafting them). If you accept this, make sure any contract you sign includes a fail-safe contingency that you are not bound unless and until you have received these documents and had adequate opportunity to review them with your attorney. In a Virginia residential condo setting, this contingency is required, so just be sure not to waive it. In a commercial setting, there is no such protection for consumers. Again, consult with competent counsel to protect yourself. You should make sure no deposits are at risk and the contract is terminable by the purchaser until this contingency is satisfied.
Assuming you have received at least the Declaration and Bylaws, you should also insist upon receiving two additional documents before you contractually bind yourself to buying: 1) the Rules and Regulations and 2) the owners' association Budget. The Rules and Regulations are often unpublished rules made by the developer or condo owners' association that can be shockingly restrictive. They can include limitations on signage (important in a commercial setting), window decor, hours of operation or move-in/move-out, pets, storage, etc. The Budget will set forth your monthly condominium assessment and the basis for that assessment. You should confirm that maintenance for insurance, driveways, grass, snow-removal and any other common facilities (pool, clubhouse, etc.) is sufficient. If not, you may find the association underfunded and be subject to special assessments later to bridge the gap. You will also need to factor in your monthly assessment to budget for your mortgage payment.
Don't Worry, Be... Advised
You will be happy if you have your trusted counselor at your side through this process. There is great value in the condominium market today and individuals and businesses alike are profiting by snatching them up in this buyer's market. Just do not attempt to navigate these perilous waters on your own. Invest in good advice from the outset and you will be glad you did. Shoot... you may even find that the seller will gladly pay your attorney's fees just to get sales of units moving again. It is definitely worth asking!
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