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Selling your Condo Daniel M. Polvere, Esq.  Eventually, the time may come to sell your condominium unit. There are many intertwined legal and practical concerns in the sale process which this article will address.
The first issue is whether you should hire a broker and an attorney to represent you in the transaction. Some people do attempt to sell, and succeed in selling the unit without a broker. In the trade, this is called a Fizbo (that is, FSBO or For Sale by Owner). There are many advantages to hiring a broker but that discussion is outside the scope of this article. Nonetheless, it is certain that a FSBO requires a great deal of seller time and effort which the broker would make unnecessary.
With respect to the attorney, there are so many potential pitfalls for the unrepresented seller that legal counsel is a virtual necessity. The attorney is even more important at the beginning of the transaction than at the closing. In fact his first task should be to review the brokerage contract, which may provide for payment of a commission in circumstances the client doesn't expect.
The seller should then arrange to put together, so that it will be available to the prospective buyer, the following material: copies of the recorded condominium documents, including all amendments; a copy of the deed into the seller and of the unit plan, if available; financial records of the association, including at least the last year's financial statement, accountant's review of same (required by law in association of over 50 units) and the current year's budget; any information on association reserves; and, if they exist, capital needs assessments on common elements of the condominium.
Buyers, perhaps depending on their own sophistication and the expertise of their attorneys, will vary widely in the amount of additional information they will request from the seller and the inquiry they will make of, for example, the property manager. This brings up the interesting question of how much a seller should disclose. The seller who is a home-owner can be held liable only for misrepresentations and not for failure to disclose. For example, if he falsely says there are no water leaks into the unit, he can be sued but not for saying nothing. A different rule applies to someone in the business of selling. It is therefore often advisable not to make representations about the unit or the condominium. However, direct inquiries should be responded to honestly; but often the buyer should be directed to the association for the answers to many questions.
Most frequently, the formal aspect of the sale begins with the Offer to Purchase. Although fairly simple and usually only a preliminary document, it does create rights and responsibilities and should be reviewed by counsel. It will be very difficult to later negotiate out of something which is specifically covered in the Offer. The buyer will typically have a number of contingencies in the Offer, escape clauses if he is unhappy with the condo documents, physical condition, etc. It is probably best to allow these to be quite broad since it is difficult to hold on to a buyer who wants to get out of the transaction at this stage. On the other hand, the time frame for the buyer's review and inspection should be kept fairly short, seven to ten days.
The buyer should then be ready to proceed or may wish to re-negotiate some item based on his review and inspection. Often, some repair or price reduction will be requested. You can evaluate the reasonableness of the request and either go forward or terminate the transaction. The goal is to have all issues resolved by the time the Purchase and Sale Agreement is ready to sign. This is actually the most important document in the transaction because all the rights and obligations of the parties will be set forth in detail.
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Back to Articles Page On a resale (as distinguished from the initial sale by the developer) the standard form Greater Boston Real Estate Board Agreement or a similar form from the local Realtor Board is typically used. However, this form is subject to considerable modification and skillful buyers' attorneys often add several pages of Addenda. Therefore, the Agreement should be carefully reviewed and understood. Having your attorney draft the Agreement is usually advantageous since it discourages some of the more extreme items a buyer's attorney might put in if he were to do the first draft. Some language about there being no special assessments or condo fee increases planned and no lawsuits against the association is probably inevitable. Most Agreements will have a financing contingency and, once the period for that has passed, preparation for the closing (passing of papers) will commence. The seller is responsible for providing access to payoff information for his own mortgage, a certificate of operating smoke detectors, a certificate from the association that there are no unpaid common charges due on the unit, and an insurance certificate showing the association insurance information with the buyer and his lender named thereon. There may be other closing requirements imposed by the Agreement and your attorney will prepare a deed. The actual closing should be routine if everything has been done as expected. There are usually two surprises for the inexperienced seller. One is that the Commonwealth imposes a "stamp tax" on the transaction (at the rate of $4.56 per thousand of purchase price and higher in Barnstable County). The other is that the proceeds of the sale are not available until the deed is recorded at the Registry, usually in a few hours or the next day. If your attorney is present at the closing, which is generally wise, he will be given the check to hold until the papers are "on record". And that is it. In summary, the sale can be an unruffled and satisfying process with the proper guidance and preparation. Daniel M. Polvere is a partner in the law firm of McCullough, Stievater & Polvere, LLP with an office in Boston. His real estate practice includes representation of condominium associations and owners. |