Q. What is a condo and how is it formed?
In Rhode Island, a condominium is any real estate project that includes individually owned units (i.e., a residential unit) and common items (i.e., general common items and limited common items) that are owned by the unit owners as tenants in common.
A condominium is created in Rhode Island by filing a declaration of condominium with the appropriate office in the city or town where the project is located. The statement must be written in accordance with the Rhode Island Condominium Act (the “Act”) for all condominiums created after July 1, 1982.
Q. What are the bylaws?
The bylaws are the rules of the condominium. The bylaws are enforced by the elected officials of the association. Bylaws can be changed with a certain percentage of votes from the association’s unit owners. A buyer should always review the bylaws carefully before entering into a purchase and sale agreement. Buyers are sometimes surprised to find that association representatives can enter the buyer’s unit; No pets allowed; or a buyer cannot alter the exterior of their unit without the permission of the association.
Q. What is a condo unit? What is a general common element? What is a limited common element?
A condominium unit (that is, residential living space) is the area in which the owner of a unit has exclusive property interests.
A general common element is owned by all unit owners as common tenants with each other and all unit owners have the right to use and enjoy a general common element (ie, a road).
A limited common element of a condo is owned by all unit owners as common tenants with each other. However, only the owner of a unit or a limited and specific group of unit owners have the right to use and enjoy a limited common element (i.e. a patio, driveway or porch).
Q. What is a condo sale contract?
A condo purchase and sale agreement is a contract to buy and sell a unit. Many residential sellers will use a standard purchase and sale agreement form. However, there are different purchase and sale contracts available. It is always advisable to have an experienced condo law attorney review or draft a purchase and sale agreement prior to signing such an agreement.
Q. What is a public offering statement?
A public offering statement is a summary of the statement and includes important information related to the condominium. A public offering statement must be written in accordance with the Rhode Island Condominium Law for all condominiums created after July 1, 1982. The buyer has the right to cancel the purchase and sale contract within 10 days of the receipt of the public offering declaration. A seller who is required to deliver a public offering statement to the buyer will face the penalties prescribed by law if the seller does not provide a public offering statement.
Q. Is a public offering statement required prior to closing for all condos?
Any declarant or person who is in the business of selling real estate requires a declaration of public offering when that declarant or person offers a unit for sale on their own account to a buyer of a condominium unit.
A public offering declaration is not required in the following cases: i. if the condominium contains 12 units or less, it is not subject to further development rights and the declarant has owned the units for more than 2 years from the date of the first sale; and ii. non-residential projects where all units are non-residential or in residential projects where waived by agreement; and in the following cases: disposition or transfer by gift; court order; by a government agency; foreclosure or in lieu of foreclosure; alienation or transfer to a person in the real estate business who intends to resell the unit; and when the contract of sale can be canceled without penalty by the buyer.
Q. What is a condo resale certificate? When is a resale certificate required before closing?
The association prepares a resale certificate at the request of a unit owner who is selling his unit. The resale certificate contains important information and must be written in accordance with Rhode Island Condominium Law.
A resale certificate is required for all sales when a public offering statement is not required. However, a resale certificate is not required if a public offering statement is exempt as explained in the previous question.