Questions worth asking the association

How to use these questions

A well-run association answers these quickly and in writing. One that cannot has told you something; one that will not has told you more. The response is part of the data.

Ask for the artifact, not the opinion. "Is the building in good shape?" produces nothing usable. "Please provide the most recent engineering or reserve report and the last twenty-four months of minutes" produces evidence you can read. Every question below is written to produce a document, a figure or a date.

Ask the same question twice, of two people. The listing agent, the seller, the manager and a board member will not always give the same answer, and divergence is the signal — not an accusation of bad faith, but a pointer to where to look. Ask in writing. Most questions go to the manager or board through the seller: a buyer has no direct right to demand answers from an association they do not yet belong to.

Money now, and money later

Money now

• What is the current assessment for this unit, and what does it include? What was it three years ago, what drove the change, and are there separate amenity, parking, storage or master association fees?
• Is any special assessment currently levied, in collection, or approved but not yet billed?
• Has a special assessment been discussed by the board or at a membership meeting in the last three years, and what was the outcome?
• What is the delinquency rate, and how has it trended?
• Does the association have a loan or line of credit outstanding, and is repayment funded by a separate assessment? Is a transfer fee or capital contribution due at closing?

Money later

• When was the reserve study performed, by whom, and did it include a site inspection?
• Is the association funding at the level the study recommends, and if not, by how much is it short? Which components are within five years of the end of their useful life?
• What capital projects are anticipated in the current and next two fiscal years, how will each be funded — reserves, special assessment, or borrowing — and has any project been deferred?
• Are there statutory inspection or reserve-funding requirements here, and is the association in compliance?

The building, and what the association knows about it

These are governance questions, not engineering ones. The point is not to have the manager diagnose the building; it is to establish what the association has been told and what it did about it.

• Are there known structural, envelope, roofing, plumbing, electrical or mechanical problems?
• Has any engineering, structural, envelope or building-condition report been prepared in the last five years? May I have a copy? The highest-value request here: those reports were produced by professionals with access a buyer does not have.
• Are there open permits, code violations or building-department orders affecting the property?
• Is there a history of water intrusion, mould or pipe failure affecting this unit, the units above it, or its stack? What is the master policy claims history?
• Where a statutory structural inspection applies: has it been performed, what did it find, and what is the funding plan?

Calibrate the answers. A report identifying sealant replacement, localised spalling repairs or a roof approaching end of life describes a building maintained on a normal schedule. What matters is whether the finding was scoped, funded and executed — or left in the minutes.

Insurance — the largest uninsured number in most buildings

This section produces more surprise per question than any other, because the deductible structure is rarely discussed until there is a claim.

• What form is the master policy — bare walls, single entity, or all-in? Please provide the declarations page and schedule of forms and endorsements, not the certificate of insurance.
• What is the all-other-perils deductible, and is it flat or a percentage?
• Is there a separate wind, hail or named-storm deductible? What triggers it, what is it a percentage of, and does it apply per event, per season or per year?
• Is there a per-unit deductible, and how is the master deductible allocated between association and owners?
• When was the replacement-cost valuation last performed, and is there a coinsurance clause or agreed-value endorsement?
• Is ordinance-or-law coverage in place? What flood coverage relative to replacement cost? Has any carrier non-renewed or declined in the last three years?
• What loss-assessment limit would you suggest an owner carry, given the master deductible?

Three things buyers get wrong about loss assessment

Loss assessment responds when the association levies an assessment arising out of an insured event — the owner's share of damage exceeding master limits, of a liability claim exceeding master liability limits, or of the master deductible after a covered loss.

• The built-in limit is usually small. Many unit-owner forms carry a modest default limit bearing no relationship to a realistic per-unit share of a large master deductible. Higher limits are generally available for a small premium, and almost nobody asks.
• The assessment must arise from a peril the owner's own policy covers. One following flood or earthquake damage will generally not be covered unless the owner carries that coverage.
• It does not cover ordinary special assessments. An assessment to replace a roof, fund reserves or comply with a structural inspection mandate is a capital expense, not an insured loss. No endorsement responds to it — the point that separates the insurance question from the reserves question.

The arithmetic behind the deductible questions: a percentage deductible is a percentage of insured value — the replacement cost of the whole building, not one unit. On a large tower that is a very large number, allocated across owners, applying before the policy pays anything.

Governance, litigation, and the question the standard form does not ask

• Is the association party to any pending litigation, arbitration or administrative proceeding — as plaintiff or defendant, on what subject, with what exposure and what position from the insurer?
• Has the association received any demand letter, pre-suit notice, notice of claim, or tolling agreement request in the last three years?
• Are there unsatisfied judgments against it, and is it in good standing with the state's corporate filing office? When was the last contested board election, and have directors resigned mid-term?
• May I have the last twenty-four months of board and membership meeting minutes?
• Who manages the property, and is the manager affiliated with the developer, a board member or a vendor? Are there long-term contracts or leases of common elements?

Why the demand-letter question is separate

The standard industry condominium project questionnaire lenders send to associations asks whether the association is involved in any active or pending litigation. That is narrower than the underwriting standard it serves: on its face it does not reach demand letters, pre-suit notices, tolling agreements, arbitration, or open code enforcement. An association can answer "no" truthfully while holding a fully developed construction-defect claim that has not been filed.

Note the asymmetry: the same form asks about planned special assessments, but only about active or pending litigation. And where it asks a compound question — hotel activity, rental pooling and occupancy restrictions in one item — a "no" covers every limb at once. Compound questions are worth asking again, one at a time.

A reframe for whatever answer you get: is somebody suing the association about money it owes, or about the building itself? Collections, a slip-and-fall the carrier is defending, a subrogation claim after a water loss — bounded, insured or routine. Construction defect, structural failure, habitability and coverage denial are unbounded when you look at them, and the owners very often end up paying.

Rules, transfer, and the developer

Rules and use

• What is the minimum lease term? Is there a leasing cap or waiting list, and where does this unit stand on it?
• Is short-term rental permitted by the documents and, separately, by local ordinance? Is there any rental pool or designated-rental-agent requirement?
• Is there a right of first refusal or board approval requirement, and how is a waiver obtained and recorded?
• Is the community age-restricted, under which exemption, and when was the last age survey? Have the pet, parking or alteration rules changed in the last two years?
• Are there alterations to this unit that were not approved, or that carry a maintenance obligation running to the owner?

One trap worth knowing: grandfathering under a leasing restriction, and position on a waiting list, commonly attach to the owner rather than the unit. A seller's exemption may not transfer to you, and the answer is in the document rather than the assurance.

Developer and turnover, where applicable

• Is the declarant still in control, and when does control end under the statute and the declaration? Was there a turnover audit?
• Was a transition study performed — by whom, when, what did it find, and what was done? A board that skipped it did not save money; it converted a potential developer liability into a certain owner liability.
• Does the declarant retain development or annexation rights — over what land, until when, for how many units — and how would that change percentage interests, assessments and votes? Is it obliged to complete later phases?
• What completion assurance exists for unbuilt common elements, and when does it expire?
• If this is a conversion: may I see the engineer's report on the condition and remaining useful life of the structural components and major systems? Where a state requires it, that is the most valuable document in the purchase.

The three that surface the most risk

If you get three questions answered before you have to decide, ask these.

1. "May I have the last twenty-four months of board minutes?"

Because it is the only request that produces unfiltered information — the one document written by insiders for insiders — and because the response is itself a test. Minutes disclose repeat problems, dropped proposals, failed votes and litigation that no form captures.

2. "What is the master policy deductible, is any part of it a percentage, and how is it allocated?"

Because it is the largest uninsured number in most buildings and almost no buyer knows it. A percentage deductible on the replacement cost of an entire tower lands on owners before the policy pays anything, and routinely exceeds their loss-assessment coverage.

3. "Has the board discussed a special assessment, a capital project, or litigation in the last three years — and what happened?"

Because it catches what is real but not yet formal. A levied assessment appears in the estoppel certificate and a filed lawsuit on a questionnaire; the discussed-but-unresolved version of either appears nowhere except here and in the minutes.

A closing note. Most associations answer most of this without difficulty, and most answers are unremarkable: assessments rose with insurance, the reserve study is being followed, the litigation is a collections file, the deductible is flat and modest. That is the ordinary case and should read as ordinary. The purpose of the list is to find the few answers that do not fit, and to notice which questions went unanswered.

Common questions

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