Arkansas Condo Due Diligence Checklist

Where Arkansas due diligence deserves the most attention

Legal Framework

Condominiums — Horizontal Property Act (HPA), Ark. Code §§ 18-13-101 to -120. Enacted as Act 60 of the 1961 First Extraordinary Session (a “horizontal property regime” = condominium). A regime is created only by recording a master deed (the declaration) plus engineer/architect-certified plans (§§ 18-13-103 to -105) and recorded bylaws (§ 18-13-108).

Reserve Studies and Reserve Funding

No reserve study / no reserve line in the budget: Expect future special assessments for roofs, elevators, parking decks, and envelope work; price it in.; Thin reserve balance relative to building age: Older Little Rock mid-rises and resort/lake condos (Hot Springs, lakes) frequently run on near-zero reserves.; Disaster funding by statute: In a Arkansas condo, a major uninsured loss can trigger a mandatory pro-rata reconstruction assessment under § 18-13-119 with no reserve cushion — a sharp, immediate cash demand.; Improvement-district communities: Reser…

Structural Inspections and Building Safety

Arkansas has no statewide condominium milestone-inspection or façade/balcony-inspection law (nothing analogous to Florida SB-4D, NYC Local Law 11, or California SB-326/SB-721). Building safety rests on ordinary code enforcement:

Insurance Requirements and Insurance-Market Risk

Tornado/hail/wind dominate losses. Arkansas sits in a high-frequency severe-convective-storm corridor. 2025 alone saw multiple violent tornadoes, including two EF-4s on March 14–15, 2025 (Stone/Izard and Independence/Jackson counties), the strongest in over a decade, leading to a federal Major Disaster Declaration (Individual Assistance approved May 13, 2025 after an initial denial and appeal).; Premiums surging.

Resale Disclosures and Buyer Cancellation Rights

Master deed (declaration) + all amendments, recorded bylaws, and plats (from the county recorder).; Whether the regime has opted into Act 516 (affects boundaries, voting, declarant rights).; Written statement of unpaid assessments / “estoppel” for the unit — get it in writing from the board/manager and confirm it binds the association if possible.; Current budget and 2–3 years of financial statements; any audit/review.

Assessments, Special Assessments, and Borrowing

`special_assessment_pending` – Board approved/proposed a special assessment.; `assessment_increase_no_cap` – No statutory cap; check declaration limits and history.; `rental_surcharge_in_place` – § 18-13-116(a)(2) rental surcharge applied (cost to investors).; `delinquency_interest_accruing` – Post-2025 interest on past-due dues.