No Mandatory Financial
Disclosure to Buyers
You cannot see a building's finances, reserves, pending litigation, or upcoming assessments before you buy. No law requires anyone to show you. You are buying a share of a corporation — blind.
THE PROBLEM
The most expensive purchase of your life, with the least information.
When you buy a condo or co-op in New York City, you are purchasing a unit in a shared-ownership corporation. Your financial fate is tied to the building's financial health: its reserve fund balance, its pending capital projects, its litigation exposure, its insurance costs, its common charge trajectory, and its managing agent's competence. These are not peripheral details. They are the core determinants of your total cost of ownership.
And yet there is no New York statute requiring that any of this information be disclosed to you before you buy. No mandatory resale disclosure package. No standardized financial summary. No statutory right to see the audited financial statements, the reserve study, the capital plan, the insurance coverage summary, or the pending litigation report before you sign a contract.
In practice, your real estate attorney may request some of these documents during due diligence — if you have a good attorney, and if the board cooperates, and if the documents exist. Many boards refuse to share financial documents with prospective buyers. Many buildings have no reserve study. Many managing agents delay document production until after the contract deposit is at risk. The result is that most buyers in New York City commit to a purchase of $500,000 to $3,000,000 with less financial information than you would receive when buying a $30,000 used car.
This information asymmetry benefits sellers (who know about upcoming assessments and do not disclose), managing agents (who control the documents and the timing), and board attorneys (who advise boards to minimize disclosure). It harms only the buyer — the person making the largest financial commitment.
WHY IT MATTERS TO YOU
You will not find out until it is too late.
The typical scenario: You buy a condo for $850,000. Common charges are $1,200/month. The building seems well-maintained. Three months after closing, you receive notice of a $45,000 special assessment for facade repairs. Six months later, common charges increase 15% because the 421-a tax abatement is expiring. The seller knew about both. Your broker did not ask. Your attorney requested the board minutes but the board delayed production until after closing. And no law required anyone to tell you.
This is not a rare scenario. It is the standard experience for a significant percentage of NYC condo and co-op buyers. The information that would have changed your purchase decision — or your purchase price — was available to the seller, the board, and the managing agent. It was withheld from you because no law required its disclosure.
Before you buy, use our offering plan red flags guide and insist on receiving: (1) the last three years of audited financial statements, (2) the current reserve fund balance and any reserve study, (3) the capital improvement plan for the next 10 years, (4) all pending and threatened litigation, (5) the current LL11/FISP status, (6) the 421-a or J-51 abatement schedule, and (7) the board meeting minutes from the past 12 months. If any of these are refused, factor the risk into your offer — or walk away.
WHAT OTHER STATES DO
Every major condo state requires buyer disclosure. Except New York.
Florida Statute §718.503 requires sellers to provide buyers with a comprehensive resale disclosure package including: governing documents, current budget, reserve schedule, pending assessments, pending litigation, insurance coverage summary, and a statement of all assessments levied in the prior 12 months. Buyers have a 3-day rescission period after receiving the package.
California Civil Code §4525 requires a standardized "Common Interest Development Disclosure Package" including: governing documents, financial statements, reserve study summary, pending litigation, insurance summary, and any pending or anticipated assessments. The package must be delivered before closing.
Virginia, Nevada, Hawaii, and Colorado all require standardized resale disclosure packages with financial information, assessment history, and litigation disclosures.
New York — the largest condo and co-op market in the country — has no comparable requirement. The buyer's access to information depends entirely on the diligence of their attorney, the cooperation of the board, and the honesty of the seller.
PROPOSED FIX
Standardized disclosure. Before contract. Every sale.
- NY Resale Disclosure Act: Require delivery of a standardized disclosure package to every condo and co-op buyer before contract execution
- Required contents: Current financials, reserve balance and study, capital plan, pending assessments, pending litigation, insurance summary, LL11/FISP status, tax abatement schedule, managing agent identity and complaint history
- Rescission right: Buyer has 5 business days after receipt to rescind the contract with full return of deposit
- Managing agent obligation: The managing agent must produce the disclosure package within 10 business days of request, at a capped fee of $250
- Seller liability: Seller is liable for material omissions or misrepresentations in the disclosure package
FAQ
Frequently Asked Questions
Am I entitled to see the building's financial statements before buying?
Not by statute. Your attorney can request them during due diligence, and most cooperative boards produce a "board package" that includes some financial information. But there is no statutory right to receive specific financial documents before contract execution, and boards can delay or restrict access. Condos are generally worse than co-ops in this regard because co-op board packages at least include a standardized financial questionnaire.
Will my real estate attorney check for upcoming assessments?
A good attorney will ask. But the attorney depends on the managing agent's cooperation to get the information, and the managing agent has no legal obligation to respond promptly or completely. Many attorneys send a standard questionnaire and accept whatever comes back — or proceed to closing when nothing comes back at all. Ask your attorney specifically whether they received and reviewed: pending assessments, reserve balances, LL11 status, and pending litigation.
Can the seller be held liable for not disclosing known problems?
New York follows the "caveat emptor" (buyer beware) doctrine for real estate sales. Under Stambovsky v. Ackley, a seller who actively conceals material defects may be liable — but proving active concealment is difficult and expensive. New York is one of the few states that does not require a standardized seller property condition disclosure (PCL §462 provides a $500 credit in lieu of disclosure for residential sales, and most sellers choose the credit).
What should I absolutely insist on seeing before signing a contract?
At minimum: (1) last 2 years of audited financial statements, (2) current year budget and actual spending, (3) reserve fund balance, (4) any pending or planned special assessments, (5) LL11/FISP status, (6) 421-a or J-51 abatement expiration date, (7) pending litigation summary, (8) insurance coverage summary. If any are refused, negotiate a contract contingency or increase your risk budget accordingly.