Preparing Documents an Association is Required to Provide to Prospective Purchasers
In today’s market, homebuyers need to act swiftly and are often under time constraints dictated by the purchase contract. Thus, it is important for condominium associations to be prepared for when a prospective purchaser makes a request for documents that the association is required to provide (and know what an association is not required to provide) under Florida Statute 718.111(12).
What Must an Association Provide a Prospective Purchaser?
Under Florida Statute 718.111(12)(c) and (e), an association is required to provide a prospective purchaser with:
- The Declaration and any amendments;
- Articles of Incorporation and any amendments;
- Bylaws and any amendments;
- Rules of the association;
- Question and Answer Sheet*; and
- Year-End Financial Reports.
*A Question and Answer Sheet is required to be updated annually and contains information for prospective purchasers regarding voting rights; unit use restrictions; leasing restrictions; rent or fees for common use facilities; the number of assessments per unit type and whether they are collected monthly, quarterly or otherwise; whether membership in the recreational facilities is mandatory and the membership fee; and any court cases in which the association is a party and may face liability in excess of $100,000.
In What Format Can an Association Provide the Above Documents?
An association can provide the above documents to a prospective purchaser in paper or digital format, but digital is likely preferred as it is the easiest and more cost-effective method. The association can have all of these documents in a share link or online portal so that they can be easily provided upon request. An association should update the link frequently to make sure all documents are current (at least once a year and after amendments are made).
By statute, these documents also have to be made available for scanning, copying or taking pictures of (for example using a smartphone to take pictures), so it is also advisable that the association keep a paper copy of the above documents available as well.
Can an Association Charge a Prospective Purchaser for the Documents?
An association can only charge the prospective purchaser “actual costs” in providing the above documents. Unless a paper copy is being provided, an association would not incur any costs, and thus cannot charge a prospective purchaser when a request is made for the above-listed documents. An association must also make the documents available for scanning, copying, or taking pictures of free of charge.
What if a Prospective Purchaser Asks for Something Not Required?
Although a prospective purchaser may request additional information, such as structural reports, budgets, reserve studies, etc., the Association is not obligated to provide any documents beyond what is listed above. It is the association’s decision whether to provide a prospective purchaser with materials beyond the above-listed documents.
If an association chooses to provide information beyond the minimum required by statute, the association can charge a prospective purchaser a reasonable fee (not to exceed $150) plus the cost of photocopying and any attorney’s fees incurred by the association in connection with such response. Frequently, prospective purchasers ask for information concerning all pending litigation, including a brief summary of the cases (sometimes called a “litigation letter”) because the mortgage company requires such information before providing a loan.
Note that if the documents are not from the required list, an association is not liable for providing incorrect information if, when the information is provided, a statement is also made that the information is provided in good faith and to the best of the association’s ability as to its accuracy.
Other Ways Prospective Purchasers May Obtain Information
One way a prospective purchaser could receive additional documents is by having the current unit owner or association member make an official records request under Florida Statute Section 718.111(12), and then share the results with the prospective purchaser. In addition, under Florida Statute Section 718.503(2), the seller is required to provide the prospective purchaser with a “governance form”, which includes information such as the role of the board, meeting notice requirements, maintenance requirements of common areas, special assessments and owners’ rights regarding voting, attending and speaking at meetings, and inspecting or copying records. the owners’ rights to attend/speak at meetings, the owners’ rights to inspect and copy records.
Changes After the Champlain Towers Tragedy
Based upon the recommendations contained in the Report of the Florida Bar RPPTL Condominium Law and Policy Life Safety Advisory Task Force, there may be some forthcoming changes to the current requirements as to what an association is required to provide to a prospective purchaser. In its report, the Task Force discusses at length how an association is not required to provide prospective purchasers with reports that were procured regarding the structure of the condominium or building inspection reports. The Task Force specifically recommended that if an association procures a report regarding the building structure, life safety, or other inspection reports, that the reports should be made available to a prospective purchaser. This recommendation could be implemented in the future by way of statutory amendments.
If your association receives an official records request, needs assistance preparing a Question and Answer Sheet, receives a request for information regarding pending litigation in connection with a prospective purchase, or has other issues or concerns related to the above, Haber Law’s attorneys are experienced in these areas and available to assist your association.
About the Author: Tiffany Ashley Disney is an associate attorney who concentrates her practice in the areas of complex business and condominium litigation.