For those in the market for new condominiums at one of the many Florida enclaves that are currently under construction or have recently been completed, the various documents and disclosures provided by developers can be a bit confusing and overwhelming. Buyers for such properties need to understand they are agreeing to the stipulations under the community’s governing declaration and bylaws, which are akin to a contract between the parties. Prior to deciding to buy, they should carefully review and consider all the information they are provided, and consult with qualified and experienced community association attorneys regarding any questions or uncertainties.
In addition to the recorded declaration of condominium and the association’s bylaws, articles of incorporation, rules and regulations and amendments of such documents, purchasers should pay close attention to the purchase and sale agreement, which serves as the actual contract between the buyer and the developer for the acquisition of title to the unit. These documents often include language indicating the amenities and features specifically included in the transaction that the developer will be obligated to provide at closing, so it is critical to compare what is being included in the transaction by virtue of such documents with the sales materials and ask questions regarding any discrepancies that may exist.
The additional material provided by the developer and its sales staff will include a prospectus, which provides a general overview of the project, as well as a detailed drawing of the completed project, including a plat. Notwithstanding the importance of the purchase and sale agreement as well as the other documents referenced above, the documents which may arguably be considered most important are the governing documents of the condominium, including the declaration of condominium and the association’s articles of incorporation, bylaws, rules and regulations, together with all amendments of such documents. Those documents will provide a comprehensive overview of the operational details and obligations between the association and its unit-owner members.
Just as the name implies, the rules and regulations will include all the guidelines for living in the community. If any of these present any issues and questions for prospective buyers regarding exactly what is required for adherence, such questions should be addressed with the sales and developer representatives prior to agreeing to a purchase.
In anticipation of such questions and concerns, condominium developers are obligated to provide an FAQ document with answers to the most commonly asked questions. Such a document will complement a brochure as well as any other marketing materials and artist renderings used to provide a complete picture of what the project will have in store.
The developer will also provide buyers with an annual budget for the association, which provides a breakdown of all the expenses, including the developer’s contributions, to cover the costs of maintenance, amenities and reserves. These expenses will comprise the dues for each unit, typically due in monthly increments, so every buyer should rely on them for their own financial planning of their future ownership costs.
In their review of all these documents, prospective buyers should pay particular attention to their voting rights, which will cover how decisions over the administration of the community will be made as well as their future input and role as a unit owner. Also important for many buyers will be the stipulations covering rentals in the community, including those providing for association approval of prospective tenants and any restrictions pertaining to short-term rentals.
In addition to those restrictions, many owners will also be very interested to learn about the community’s policies on pets, parking, guests, and other lifestyle considerations. Again, any questions or concerns should be addressed prior to purchase.
The purchase/sale agreement will outline the deposit and payment timeline for the acquisition and the ensuing closing. After it is executed, the purchaser will have a 15-day rescission period during which they can further review all the documents and cancel the agreement if they so choose. During this period, buyers should carefully consider everything they have been provided to ensure all their expectations are being met.
At the conclusion of the recission period, buyers will typically be required to pay their initial deposit, and any subsequent payments to address remaining balances will then be issued in accordance with the terms under the purchase/sale agreement.
New-construction condominiums typically represent significant purchases for their buyers, who are agreeing to become charter members of the newly enshrined associations governing the community. By carefully reviewing all the provided documents and disclosures, and inquiring about any potential discrepancies between what is being described in the sales/marketing material versus what is listed in the purchase and sale agreement, buyers will be able to gain a clear understanding for what is being offered as well as their own future rights and obligations.