Whenever a person purchases a condominium in Louisiana, there are mandatory disclosures and declarations that the Condo Association must provide to the Seller to be provide to the Purchaser prior to the signing the act of sale. Until such time that these statutorily mandated disclosures and declarations are provided, the Purchaser is able to withdraw from the contract to sell.
In accordance with LA R.S. 9:1124:107, in the event of a resale of a unit an owner, other than a declarant, shall furnish to a purchaser of any contract to purchase a unit, or otherwise before conveyance, a copy of the declaration other than plats and plans, the articles of incorporation or documents creating the association, the bylaws, and a certificate containing eight enumerated items. Those eight items include the following:
- A statement setting forth the amount of any current common expense assessments.
- A statement of any capital expenditures approved by the association for the current and two next succeeding fiscal years.
- A statement of the amount of any reserves for capital expenditures and of any portions of those reserves designated by the association for any specified projects.
- The most recent balance sheet and income and expense statement of the association, if any.
- The current operating budget of the association, if any.
- A statement of any unsatisfied judgments against the association and the status of any pending suits to which the association is a party.
- A statement describing any insurance coverage provided by the association, and
- A statement of the remaining term of any ground lease affecting the condominium and provisions governing any extension or renewal thereof.
By adopting the above, it is clear the legislature intended for the purchaser to be fully informed as to the current state of the Condo Association financial status and impending and potential obligations. By allowing the Purchaser to withdraw from the contract to sell until the requirements are provided, the Purchaser is protected from obligating themselves to what has the potential to be a disastrous situation.
Here are a few examples of situations the legislature is trying to avoid:
- The Seller is not current as to the Condo Association fees, the Condo Association can take action to collect those fees from the new owner.
- Other condominium owner’s are behind on their fees and/or cannot be collected from and the association seeks to replenish their reserves by levying additional charges on the those unit owners they can collect from.
- The Condo Association has elected to improve or repair the exterior of the building or common spaces and to pay for the expense the Condo Association is levying an additional assessment for the next several years.
Critically, one must understand that the protection of LA R.S. 9:1124.107 only extends to such time as the Purchaser signs a contract of sale or other act of conveyance. Once the act of sale or any other act of conveyance has been executed, the Purchasers can no longer rely on or claim the privilege of LA R. S. 9:1124.107. Thus, it is imperative the Purchaser ensure all due diligences related to the transaction are completed prior to signing any document conveying ownership.