Does a condominium buyer get enough information under the condominium offer to know what condominium association issues and major expenditures might be coming down the road? That may not have been true in the past, but a change has been made! The revised WB-14 Residential Condominium Offer to Purchase with a mandatory use date of September 1, 2020, contains an exciting new optional contingency designed to provide the buyer and the buyer’s lender with the opportunity to have additional insight into the operation of the condominium association and a sharper snapshot of the financial status of the association.

The 2020 WB-14 takes much of what had been the Additional Condominium Issues paragraph in the prior 2011 condominium offer and creates in its place a new optional Contingency for Additional Condominium Information that now appears on lines 149-175. 

Too important to overlook

The information listed in the Additional Condominium Issues paragraph was frequently glossed over unless the listing firm had taken this information and created a contingency in the company addenda. But this information is important for a condominium buyer to know. And now, as part of the reformatting of the WB-14, a transformation has taken place whereby those additional condominium issues will not be so easily overlooked. The Additional Condominium Issues items are now bullet points in the new optional contingency. 

The items listed in the new optional contingency help the buyer take the financial temperature of the association and determine its financial health. This information can provide valuable insight into any condominium improvements or special assessments under consideration, let the buyer know if the association is involved in any litigation that may impact the association’s financial status and in turn lead to a shortage in funds or additional assessments, and alert the buyer to any rule or bylaw amendments on the horizon. The buyer may want to know if the association has regular meetings, if the unit owners are active, and what issues have been discussed by the board of directors. The listed information also includes documentation that may be required by a lender or underwriter, such as the association’s certificate of insurance. 

The new optional Contingency for Additional Condominium Information in the 2020 WB-14 includes the following components and features. 

Delivery deadline

The Contingency for Additional Condominium Information, if the box on line 149 is checked, makes the offer contingent upon the seller delivering to the buyer, within 10 days after acceptance of the offer, the listed materials in existence as of the date on line 1 of the offer. The deadline for the delivery of the listed materials is the same as the deadline for the delivery of the required condominium disclosure materials — 10 days after acceptance of the offer. 

Minimize chasing documents

At the same time, consideration was given to the seller and the listing firm to avoid making the new contingency too complicated to fulfill. It was important to not create unnecessary burdens on the seller to try to chase down documents that were not in existence or not available from the association. One result of this concern is that the only documents the seller must deliver are those in existence on the date on line 1 of the offer. That means if a document delivered under the new contingency is modified or changes after it is delivered, there is no obligation under the new contingency to provide the amendment or updated version. Consequently, there is no rescission right pertaining to the delivery of a material change or amendment like there is for the required condominium disclosure materials.

Customizing list of listed materials

When using the new contingency, the list of information, referred to as the “listed materials,” is stated in bullet points for ease of use. If materials on the list are not desired or not available, they can be lined out or referred as deleted in the additional provisions section when the buyer drafts the offer. There also is the opportunity to request other documents or information by writing it in on the blank line marked “Other.” The seller, on the other hand, may find they need to counter the offer if any listed materials cannot be provided by the association or management company. 

Planning ahead

By having the bullet point items listed in the optional contingency, the seller and listing firm are put on notice these are documents a buyer may ask for so they know to get in touch with the condominium association and any management company to learn what documentation is on hand and accessible, as well as what information can be produced upon request. Whenever a condominium unit is being offered for sale, it is prudent to be prepared and determine the availability of the required condominium disclosure materials and the listed materials stated in the contingency. In many condominiums, the financial statements, minutes for unit owners and board of directors’ meetings, and the certificate of insurance should be readily available. In fact, the seller may have received copies of these documents or links to them if the condominium association has a website or other online storage of documentation.

The note on lines 165-166 alerts sellers to verify the availability of the listed materials before they receive any offers. The seller and listing firm can prepare by rounding up the documents, or the links thereto, and letting cooperating agents know in advance if certain items are not available or may be problematic. At the same time, the buyer and the cooperating firm can find out what information will be required by the lender and be sure to request that in the contingency. The cooperating agent may wish to reach out to the listing agent to see if any items are not available. If the buyer’s offer asks for documentation that cannot be obtained, that offer may be rejected or countered. 

Keep in mind some of the listed materials may not exist. The seller can simply indicate, for example, there is no litigation involving the association, or there is no master or additional association.

Buyer rescission rights

The new optional Contingency for Additional Condominium Information includes its own subsection of buyer rescission rights. Rescission rights are repeated in the new contingency because although they are substantially similar, they are not identical to the statutory buyer rescission rights that apply with regard to the delivery of the required condominium disclosure materials. The buyer’s ability to request the listed materials is contractual only and not anchored in the statutes. Similarly, the connected buyer rescission rights are contractual, not based in the statutes. 

The buyer rescission rights for the listed materials are stated separately because they are not quite the same as the statutory buyer rescission rights for the required condominium disclosures. The buyer can rescind after the materials are received within 10 days after acceptance of the offer or after going through the request for a missing materials process.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.