Understand the Red Flags Before You Buy

Red flags to check before you buy

These are the patterns worth checking in the document package before you waive contingencies. None is automatically a dealbreaker — each is a risk to understand and a set of questions to ask before you close.

• Low or underfunded reserves

  A low percent-funded figure is a leading cause of surprise special assessments.

• Recent or pending special assessments

  Check the budget, reserve study, and minutes for assessments discussed but not yet voted.

• Large insurance deductibles or coverage gaps

  Master-policy deductibles and exclusions can pass through to owners as a loss assessment.

• Repeated board disputes or thin meeting minutes

  Governance patterns in the minutes often surface before the next financial problem.

• Pending litigation involving the association

  Active lawsuits can affect financing, assessments, and what must be disclosed.

• Rising dues without a clear repair plan

  Steady fee increases with no capital plan can signal deferred problems catching up.

• Deferred maintenance or major upcoming projects

  Roofs, elevators, facades, and decks nearing end of life mean spending is coming.

• Missing, late, or incomplete resale/estoppel documents

  Gaps or delays in the disclosure package are a red flag worth questioning on their own.

• High delinquency or weak financial controls

  Owner delinquency and shaky bookkeeping strain the budget every owner shares.

• Rental, pet, parking, or use restrictions

  Rules in the governing documents can conflict with how you plan to use the unit.