Step 15: Condo/Home Owner Association Documents

Condos, townhomes, and Single Family CPR Homes are all part of a “CPR” Condominium Property Regimes. Buyers will receive a chance to review these documents. Once in contract the seller is responsible to order and pay for a current set of the Condo/Home Owner Association Documents. This set of documents could include any of the documents listed below, as well as any additional documents that may apply. 

• Approved Minutes of the last three (3) Board of
• Directors Meeting
• Articles of Incorporation/Association and
• Amendments
• Bylaws and Amendments
• Copy of any and all pending litigation complaints
• filed by or against the Owner’s Association
• and/or its directors that are currently unresolved
• Covenants, Conditions and Restrictions (CC&Rs)
• Current Financial Statement
• Current and/or Proposed Budget
• Current House Rules
• Declaration and Amendments
• Design Standards and/or Guidelines
• Insurance Summary
• Lender’s Disclosures
• Minutes of the last Annual Meeting
• Planned Community Documents
• Project Information Form RR105c
• Reserve Study or Summary
• Subdivision and/or title documents

Condominium Documents: Review of the condominium documents is one of the most important parts of the home buying process. For a Single family home association documents or CC&Rs may apply which we will go over in the next step. The condominium documents will tell you if a building/complex/association is financially stable, if they have had any past issues, pending litigation, or current or future assessments. Many buildings in parts of Oahu were built during the 70’s & 80’s. Most of these buildings are now at the age where spalling, plumbing, and elevators need to be addressed. Depending on the size of the building, each of these items could cost hundreds of thousands or several million dollars. 

Plumbing – There are many buildings in Hawaii built during the 70s and 80s. Due to age, most of these buildings now have to address both their sewer lines and water lines. Many of these buildings used galvanized pipes for their sewer and water. Buildings must now replace these with copper and PVC piping. 

Spalling – Many older buildings have exposed concrete on the sides of their building and their lanais. Over time the rebar inside the concrete expands when it is exposed to moisture. Many times the rebar can expand and actually cause the concrete to crack. Spalling repair involves removing the damaged concrete & Rebar, replacing the rebar, pouring new concrete, and then finally sealing and painting the exterior. This is a large job that can take several years and cost millions of dollars. 

Elevators – Elevator modernization can be very costly and maintenance is an ongoing project. Depending on the size of the building and the number of elevators, a modernization project could easily cost half a million dollars or more. 

Townhomes – Townhomes and some single family home associations may have their own set of concerns. Typically some items which may need addressing are painting, roofing, parking lot resurfacing, and termite issues. 

As stated above the set of condominium documents consists of varying documents but some of the key documents are: 

RR105c – Condo Summary - The RR105c is an overview of the building and will state if there are any planned assessments or litigation. It will also show who the point of contact is for the property management company.

Reserve Study – The reserve study is a list of all the planned improvements for the next 30 years. It will list out all the capital improvement projects the building plans to do, when they plan to do them, and the current cost. It will also show the amount of reserves the building plans to have at the end of any given year after the improvements are made.

Budget & Current Financial Statement – This will show you how much money the building currently has in both cash and reserves and how they spend their money on a monthly basis.

Current and annual board minutes – Board minutes show you if there are any ongoing issues or future issues with the building. At board meetings unit owners voice their issues to the board and future projects are proposed and approved.

House Rules – House rules will stipulate important policies such as noise, hours of use for amenities, procedures for moving in and out, rental restrictions, pet policies, and rules for renovations & construction. 

Declaration – The declaration typically confirms the parking stall number for the unit. It should also shows how many units there are, the types of units, and the % of common area interest in the building for your unit. 

Common area interest % is an important number to be aware of in relation to future assessments. For example, say a building planned to do a $1 million capital improvement project for which they do not have the funds to do so. They may decide to pay for the project through a special assessment of the unit owners. The declaration will tell you what percentage of the $1 million your unit is responsible for. If your unit has a 1% interest in the common areas your special assessment would be $10,000. Even if a building has sound financials and reserves it is important for buyers to know their common area interest percentage. 

Previous, Step 14: Preliminary Title Report

Next, Step 16: HOA Documents or CC&R's (Conditions, Covenants & Restrictions)

Steps to Buying a Home

HAWAII STARTS HERE | JOE CASTANEDA (R)

Joe is a realtor with Better Homes and Gardens Real Estate Advantage Realty. He majored in finance and has experience as a former mortgage loan originator. He has helped buyers both with new project loans and going through the process of applying and obtaining units in new projects. He uses his finance, mortgage, and real estate knowledge to help home buyers find the right properties to fit their needs. Contact Joe by phone or email at (808) 351-8394 or JoeC@BetterHawaii.com.