a) What are they expected to spend Capital Projects (Forward Plan)
b) Are they being sued?
c) Are their Finances stable IE Borrowings vs Special Assessment
d) Percentage of Rentals vs Owners
e) Rules and Regulations you will need to adopt.
f) Is the Owner up to date with their fees and what do they pay
g) Confirmation of Locker and Parking descriptions.
They will provide you all Insurance Documents, Rules and Regulations, and most recent AUDITED Financial Statements. You now have these on a CD and in Print; You take them to your lawyer....
Lawyer today told a Buyer; "That condo isn't a good deal because their Annual budget is in deficit." UMMMmmm Really.... My response? "Yer stupid".
Building Budget Held Meetings (the Board of Directors and Management Company) for what they expect to spend; planning Diligently. This creates the amount to calculate your maintenance fees.
If we spend $100 more than anticipated on anything ( legal fees, repairs, a few snapped parking control gates) WE WILL BE IN DEFICIT.
If a condo is adhering to their Reserve Fund Study, {depositing the correct amount quarterly each year and earning interest} and the audits have been done.... [by accountants who manage and accounting firms who audit PLUS the engineers who calculate the remaining economic life of system components] there is generally not a lot to discuss.
WTF [who legal term] are you to decide an annual operational deficit means its a poorly run building and you recommend your buyer skip it.
A financial statement takes a snapshot at a particular calendar date. (Usually Dec 31st year end) Are you overdrawn during TAX time? Uhhuh Now pick up that book on accounting practices are review Financial Statements paying careful attention to the Source and Application of Funds. ( what we collected, what we spent / did with it)
If the building is deficit or surplus it is carried forward (and paid) into the next year. It is not a VISA card. Its a running balance.
In this case, the Buyer is changing Lawyers. or the Building could have a sale that show DFT [Deal Fell Through] when asked the agents would say Financial Statements of the Condo Corp. Depending on their KLOUT their voices might carry, damaging the financial resale and viability of the building.
Please work with people who understand... Your road will be so much smoother.
