The Saint Paul Condo Blog

And why do I need one?

Two more questions I get asked by both buyers and sellers.  The Resale Disclosure Certificate (RDC) is required for the "resale" of any condominium.  Developers selling their original, never-been-sold, condos are not required to produce this document.

The RDC is a state requirement designed to protect buyers who are purchasing a condominium (Lofts and Townhomes are also considered condominiums, its a type of ownership).

The RDC goes over the keys facts of the health of the association.  How much money is in the bank?  Are there any future assessments that are on the books?  Does the unit I am purchasing owe back dues?  Is the association being sued by anyone? 

It should also have a Profit and Loss statement or a balance sheet of some sort to show you what money is coming in and what is going out.  If a building had lots in reserves, but was taking less in than they are collecting, it's a good bet the association will have to take money out of reserves or raise due, sometimes both.

Depending on what management company the association has hired (if any) there will likely be a charge for this document.  The prices range from $50-$150.  This is at the expense of the seller and is part of the complete condominium documents that the buyer receives at time of an executed purchase agreement.

Should a buyer write an offer on a condo, have it accepted, then find out there was no money in the association reserves, the buyer can cancel the contract without forfeiting their earnest money. Release of earnest money requires both seller and buyer signatures, so if the seller is stubborn sometimes they wont sign it, even though they are legally required to sign it.  If they accept another offer, they have to release your funds first.

How much money is needed in reserves?

This is a difficult question to answer, because there is no blanket amount that would work.  Newly constructed buildings, will likely not have much in reserves, which is generally OK because much of the building is under warranty and will not need replacement for many years.

The size of the building will also make a difference as well.   With 20 units, you would not need as much money as you would with 200 units.

As an association president, I have a pretty good grip what buildings should have in reserves.  Also, years of selling condos help too ;)