To sell a condo, you work through your homeowners association at nearly every step: pulling the disclosure package the buyer is entitled to, paying the fees the association charges on a sale, confirming your building meets the standards lenders require, and getting the board’s approval of your buyer before you can close. The rules and dollar amounts vary by association, so the single most useful thing you can do before listing is open your governing documents and read what they say about resales.
Start With Your Governing Documents
Everything that makes a condo sale different from a house sale is written down somewhere in your association’s paperwork: the declaration or master deed, the bylaws, the rules and regulations, and the covenants, conditions, and restrictions. These documents tell you what you have to disclose, what the association will charge, whether the board gets to approve your buyer, and whether the association has a right to buy the unit itself on the same terms. Reading them early, rather than at the closing table, is what prevents the expensive surprises.
Pull the most recent two years of financial statements and the current reserve study while you’re at it. You’ll need them for the buyer anyway, and they’ll tell you whether your building is in the kind of financial shape that attracts financed offers or scares them off.
The Disclosure Package You Owe the Buyer
The buyer and the buyer’s lender need a packet of documents from the association before they’ll close. The centerpiece is the estoppel letter, sometimes called a resale certificate: a snapshot from the association confirming how much you owe in dues, whether any special assessments are pending, and whether your unit has any open rule violations.
The package also includes the governing documents (declaration, bylaws, rules, CC&Rs), the last two years of financial statements, and the most recent reserve study. Most state condo statutes give the buyer a window after receiving these to cancel the contract without penalty if something in them is unacceptable. Miss the deadline for delivering the package and the buyer may have the legal right to walk away entirely.
Disclose any active litigation involving the association. Lawsuits can create financial liability for owners and can block financing on their own.
Fees That Are Unique to Condo Sales
A condo sale carries a layer of association-driven fees that don’t exist on a detached house. Who pays each one is partly local custom and partly negotiable in the purchase contract, but you need to identify every one of them before you sign anything.
- Estoppel or resale certificate fee: the association or management company charges to produce the letter. Amounts vary widely by state and association, with some states capping the fee by statute. Rush processing costs more.
- Transfer fee: a flat charge when a unit changes hands, covering records updates, access credentials, and buyer onboarding.
- Capital contribution: a one-time payment into reserves at sale, often set as a multiple of the monthly assessment. Whether buyer or seller pays depends on local custom and the contract.
- Move-out deposit or fee: often refundable, meant to cover damage to elevators, hallways, and lobbies during the move. Some buildings also charge a nonrefundable coordination fee for reserving the freight elevator or loading dock.
- Outstanding balance payoff: unpaid monthly assessments, special assessments, fines, and late fees sit as liens against your unit. The title company will not transfer clear title until they’re paid, so request a formal payoff statement from the association.
- Lender questionnaire fee: the management company usually charges to complete the condo questionnaire the buyer’s lender sends over.
In many markets the seller covers the estoppel fee and any outstanding balances while the buyer pays the capital contribution, but none of that is fixed. Negotiate the split in writing.
Special Assessments: Who Owes What
Assessments for major repairs — a new roof, structural work, elevator replacement — can run into tens of thousands of dollars, and they’re one of the most contentious items in a condo closing. The general rule: if the association voted to approve the assessment before closing, the seller is responsible, even if the installments stretch for years afterward. Assessments approved after closing belong to the buyer.
The gray zone is an assessment the board has discussed or budgeted for but hasn’t formally voted on. Buyers don’t want to inherit a bill everyone saw coming; sellers don’t want to pay for work they won’t benefit from. These usually resolve one of three ways: the seller pays the full amount at closing, the seller offers a credit against the price, or the price is reduced to reflect the anticipated cost. Disclose any assessment you know about, voted or not. Silence here invites a lawsuit after closing.
Whether Your Building Can Be Financed
Your association’s financial condition controls who can buy your unit. If the building fails the standards that FHA, Fannie Mae, and Freddie Mac set, conventional and government-backed loans go away, and your buyer pool collapses to cash purchasers and portfolio lenders who charge higher rates and demand larger down payments. Check this before you list.
FHA Requirements
For an FHA-insured loan, HUD’s current guidelines require that at least 50 percent of units be owner-occupied or vacant, that no more than 15 percent of units be delinquent on dues by more than 30 days, and that no single entity (including the developer) own more than 10 percent of total units. The association must also hold reserves equal to at least 3 percent of its annual operating budget, unless a reserve study supports a lower figure. FHA maintains an approved-condo list; your building is either on it or it isn’t.
Conventional Requirements
Fannie Mae and Freddie Mac back most conventional mortgages, and both require the association to allocate at least 10 percent of its annual assessment income to reserves. They also look at owner-occupancy ratios, concentration of ownership, active litigation, and delinquency rates. A building that fails these benchmarks is “non-warrantable,” meaning standard conventional loans are off the table. Buyers who need financing then have to find a portfolio lender willing to hold the loan, usually at 20 percent down or more and a premium rate. The practical result for the seller is fewer offers, lower prices, and longer time on market.
The Lender Questionnaire
Whatever loan type the buyer uses, their lender sends the association a detailed questionnaire covering ownership concentration, rental ratios, reserves, insurance, litigation, and delinquencies. The management company fills it out. If the answers raise flags, the lender can deny the loan even if the buyer is personally qualified. You have no direct control over the answers, but knowing your building’s numbers lets you price and market the unit to a realistic audience.
Listing, Showings, and What Actually Conveys
Many associations restrict “For Sale” signs on balconies, windows, and common-area bulletin boards, or allow them only in one designated spot. Read your rules before your agent posts anything.
Showings in doorman or gated buildings usually require advance notice so guests can be logged in, and freight-elevator access for open houses may need to be reserved. Build these logistics into the showing schedule from the beginning.
Verify what conveys with the unit. Assigned parking spaces, storage units, and exclusive-use areas like a patio or rooftop deck may be deeded to the unit (transferring automatically) or merely licensed by the association (requiring separate assignment). Get this wrong and you’ll be unwinding disputes after closing. Your unit’s percentage of interest in the common elements, which drives your share of expenses and voting rights, is in the master deed and should match public records.
Board Approval and Right of First Refusal
Once you have a signed contract, most associations put the buyer through an approval process. The buyer submits an application with financial information, references, and authorization for background screening. The board then approves the buyer, exercises a right of first refusal, or rejects the application.
A right of first refusal lets the association (or its designee) buy your unit on the same terms your outside buyer offered. If exercised, your contract with the outside buyer is cancelled, that buyer’s deposit is returned, and the association steps in at the same price and conditions. The board must follow its bylaws exactly and act in good faith; an exercise that deviates from the original terms can be challenged. In practice, boards rarely exercise this right, but build the possibility into your timeline.
Board review typically takes 15 to 30 days, depending on bylaws and meeting frequency. If the board only meets monthly, missing a meeting can push closing out weeks. The title company won’t close without a written certificate of approval or a formal waiver of the right of first refusal.
Outright rejection is rare but possible. The board’s discretion isn’t unlimited: the Fair Housing Act prohibits rejection based on race, color, religion, sex, national origin, familial status, or disability. HUD has issued guidance that even neutral screening policies can violate the Act if they produce an unjustified discriminatory effect on a protected class. A rejection that looks pretextual exposes the association to federal liability.
Taxes When You Sell
Federal tax treatment of a condo sale is the same as any other home sale. If you owned and used the unit as your primary residence for at least two of the five years before the sale, you can exclude up to $250,000 of capital gain from income, or up to $500,000 on a joint return where both spouses meet the use requirement.1Office of the Law Revision Counsel. 26 USC 121 Exclusion of Gain From Sale of Principal Residence The two years don’t have to be consecutive; they just need to add up to 24 months inside that five-year window.2Internal Revenue Service. Topic No. 701, Sale of Your Home
Gain above those limits is taxed as a capital gain, with the rate tied to your income and how long you held the unit. If you used the condo as a rental or investment and never lived in it (or lived there less than two years), the full gain is taxable. Depreciation you claimed while renting is recaptured at a rate up to 25 percent regardless of the exclusion.
Foreign sellers face FIRPTA withholding: the buyer is required to withhold 15 percent of the total sale price at closing and remit it to the IRS.3Internal Revenue Service. FIRPTA Withholding You can apply for reduced withholding or a refund if your actual tax owed is lower, but the funds sit with the IRS until the application is processed. Build this into your closing math and file early.
Closing and the Handoff to the Association
The closing itself works like any residential sale. You sign a deed, the title company records it with the county, and the buyer’s funds are disbursed. The recorded deed makes the buyer the owner of both the unit and its undivided interest in the common elements.
Hand over everything the buyer needs for day-one access: unit keys, mailbox keys, electronic fobs, gate remotes, and access codes. If the building uses a managed access system, the management company may need to deactivate your credentials and issue new ones separately.
Notify the association as soon as the sale closes. Send a copy of the closing statement, the buyer’s contact information, and the recorded deed if requested. If the association doesn’t know the unit changed hands, it will keep billing you, and you can be pursued for dues that accrued after the sale.