When purchasing a property, whether in a gated community, a horizontal property, or a single-family home, it is essential to review the financial statements and meeting minutes. These documents are key to understanding the financial health of both the property and the community, and they help you avoid any unpleasant surprises in the future.
1. Financial Statements of the Complex or Building
When buying an apartment or property in a complex or building, you’re not just acquiring the individual unit, but also a proportional share of the common assets and shared responsibility with the other co-owners. The financial statements provide a clear snapshot of the property’s financial management. These documents allow you to assess:
- Outstanding debts and liabilities: Ensure that the property does not have any accumulated debts such as unpaid maintenance fees, taxes, or utility bills. If there are debts within the complex, they may need to be assumed by the new owners.
- Reserve fund: This fund is essential for the maintenance and repair of common areas. If the reserve fund is insufficient, the community may be forced to levy extraordinary contributions or, in the worst case, may not have enough resources to carry out urgent repairs.
- Accounts receivable status: Are there co-owners who are behind on their maintenance fee payments? This could signal financial issues within the community and may lead to administrative tensions.
2. Meeting Minutes
Meeting minutes are the official records of decisions made by the community of property owners during their meetings. Reviewing these minutes is crucial because they provide insight into:
- Pending projects or issues: Have improvement projects been approved that will involve additional costs? Are there unresolved infrastructure problems such as plumbing, electrical, or security issues? It’s important to know if any planned investments may affect maintenance fees.
- Tensions or disputes between co-owners: The minutes may reflect disagreements or conflicts that, although they may not directly affect the property’s value, could create an uncomfortable atmosphere or negatively impact the community’s cohesion.
- Approvals for changes to the bylaws: Sometimes, the assembly may approve changes to the internal regulations, which could alter the living conditions or even the rules regarding the use of common areas. These changes can have significant implications, especially if you plan to make modifications or renovations in the future.
3. Risks Associated with Not Reviewing These Documents
Failing to pay attention to these financial and legal aspects can lead to a number of problems, including:
- Unpleasant financial surprises: By not reviewing the debts and reserve fund, you might find yourself responsible for paying off debts inherited from other owners or facing extraordinary contributions to address financial issues within the community.
- Loss of property value: If the property has unresolved debts or structural problems, its value may decrease over time. Furthermore, internal tensions between co-owners can affect the reputation of the complex or building, which can impact demand for the property.
- Legal issues: If you purchase a property without knowing its legal status, you could face disputes over ownership, possession, or problems with neighbors. Meeting minutes are a crucial tool for understanding the legal situation of the property and how it interacts with other owners.
What Documents Should You Review Before Buying?
- Financial statements of the residential complex or building (last 2 years).
- Meeting minutes (last 2 years).
- Audit report (if available).
- Accounts receivable status (to check for outstanding debts).
- Certificates of payment clearance for taxes and maintenance fees.
How Can We Help?
We handle the process of requesting these documents and reviewing them to ensure the property meets our quality standards.