Q: I represent a purchaser who is considering purchasing a condominium unit in a small building, but the condominium board does not have an accountant prepare audited financial statements. Is there a requirement that condominium and co-op boards have accountants prepare audited financial statements?
A: No, there is no requirement that boards have accountants prepare audited financial statements. However, audited financial statements prepared by an accountant provide assurance that the financial statements fairly reflect the building’s financial position.
Consequently, an audited financial statement will provide a prospective purchaser with confidence that they have an accurate picture of a building’s financial condition. Purchasers considering a condominium or co-op that does not have audited financials should proceed with caution when conducting their due diligence.
Important Tip: As mentioned in a past Legal Line Question of the Week, audited financial statements for a condominium or co-op are one of the due diligence items that a real estate broker should request from the seller or managing agent as soon as possible in order to expedite the transaction.
Neil B. Garfinkel
REBNY Broker Counsel
Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP