Understanding Condo Finances

Prospective condo purchasers should look carefully into the financial health of a condo association prior to buying. The status certificate can help provide answers to important questions, such as:

  1. Is there a lien against the particular unit, or any fees still owed?
  2. Were there any special assessments levied in the past, or will there be in the future?
  3. How healthy is the reserve fund? Is there enough money for future replacements when needed?
  4. Are there any ongoing legal affairs that could result in a future financial reward or penalty following a settlement?

Once you purchase a condo unit, you’ll receive a copy of the audited financial statements, which include items such as the audit report, balance sheet, statement of revenue and expenditures, and additional notes.

Prior to purchasing a unit, here are some additional things to look for:

  1. Make sure the corporation has a clean audit opinion.
  2. Be sure they’re in compliance with the Condominium Act.
  3. Confirm that the reserve fund is adequately funded.
  4. Check if there’s an operating surplus of 1-2 months’ savings.
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About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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