Condo associations and co-op boards are required to record in written notes, called meeting minutes, all important actions taken and major building issues reviewed during their monthly board meetings and the annual member or shareholder meetings. A review of these minutes for the previous couple of years is part of the customary due diligence conducted after an offer has been accepted. It is typically done by the buyer’s lawyer and, together with a review of the building’s financial statements, which is done by either the buyer’s attorney or accountant, is an important step in the purchase process.
These association and board meeting minutes can be a treasure throve of information. They typically include discussion of major building-wide issues, such as any active or pending litigation or any threatened tax action or plans for major repair projects. They might also include shareholder complaints about a low water-pressure in C-line apartments or lack of heat on the 10th floor — things that might directly impact the unit you are considering buying. They can also include information about other more minor problems, such as barking dogs or teenage parties, that regularly interfere with good neighbor relationships.
The minutes will give you insight into what you can and cannot do living in the building. You may plan of major remodeling and discover that the board never approves relocating walls. Or if you are thinking of going to graduate school out of town, and planning to rent out your place while you are gone, you may discover that the board has extremely strict qualification rules on sub-let requests.
You also need to keep in mind that the association or board members walk a fine line between recording the minutes in sufficient detail that the legal requirement is met and not too much detail that might breach someone’s confidentiality and lead to litigation. Therefore, beware of overly sanitized minutes that may only offer hints to underlying problems. It is perfectly normal for your attorney to ask follow-up questions of the building’s management, if there is any suspicion of something amiss.
The review of the minutes is typically conducted during business hours in the building’s office.* It may be tempting for you, the buyer, to skip this meeting and leave the review in your lawyer’s hands, but that would be unwise. Only you know what kind of issues turning up in the minutes might make you reconsider living in the building. For example, you might not like how the association seems to micro-manages the condo’s common areas. Or you might feel that the board is too loosy-goosy with the running of the building. Only you will know what’s important information for your decision on whether or not to buy into the building.
*Our senior blogger Alex Starace points out that in a smaller building the process can be much more informal, with details of key board decisions communicated in an email to the potential buyer who is then free to ask any follow-up questions.
