Buying a condo in Cambridge? The numbers behind the building matter as much as the finishes in the unit. If the association’s reserve fund is thin or a special assessment is looming, your monthly costs and loan approval can change fast. In this guide, you’ll learn how reserves and assessments work in Massachusetts, what to request before you offer, how to read the documents, and practical steps to protect your purchase in Cambridge and Middlesex County. Let’s dive in.
What condo reserves are
Condo reserves are cash set aside by the association for predictable, non-recurring capital projects. Think roof replacement, exterior masonry or painting, elevator modernization, paving, and major mechanicals. Reserves are different from the operating budget, which covers routine expenses like utilities, insurance, and maintenance.
There is no statewide minimum reserve level set by Massachusetts law. Each association sets policies through its governing documents and often relies on a professional reserve study to guide funding. Solid reserve planning helps avoid large, surprise assessments later.
How special assessments work
A special assessment is an extra charge to unit owners on top of monthly fees. Associations use them to pay for a specific project or to cover a budget shortfall when reserves and operating funds are not enough. The master deed and bylaws define how assessments are proposed, voted on, and collected, including any required owner approval thresholds.
You should confirm special assessments during the transaction. The resale or estoppel certificate shows current fees due, any pending or approved assessments, and the status of the unit’s account at the time of closing.
Cambridge and Middlesex context
Cambridge and nearby Middlesex County cities include small conversions, mid-century garden communities, and newer high-rise or mixed-use buildings. Small associations, common in Cambridge triple-decker conversions, often have limited reserves and are more likely to rely on special assessments or defer larger projects. Larger, professionally managed buildings tend to have formal reserve studies and bigger balances, but they can still face significant building-wide projects.
Older brick or wood-clad buildings in this area often need cyclical work like roof replacement, masonry repointing, window updates, and drainage improvements. Local permitting or historic district rules can add cost and time, so you should ask about any code issues or open violations noted by local authorities.
Documents to request
Before you write an offer, ask for key documents or make your offer contingent on receiving them:
- Current year budget and prior 2 years of budgets
- Financial statements for the last 2–3 years, including balance sheet and income statement
- Most recent reserve study or reserve schedule, plus reserve account statements
- Board and annual meeting minutes from the last 12–24 months
- Master deed, declaration, bylaws, and rules
- Insurance summary with master policy limits and deductibles
- Disclosure of any special assessments and payment schedules
- List of pending capital projects, bids, and timelines
- Delinquency report and list of units in arrears
- Litigation summary or any demand letters
- Resale or estoppel certificate near closing
How to read financials
Start with the reserve balance and compare it to near-term needs shown in the reserve study. A large gap suggests higher risk of future assessments or fee increases. Review recent reserve withdrawals and ask how the association plans to replenish the funds.
Check for operating deficits and whether reserves were used to plug budget shortfalls. Look at year-over-year dues changes and any midyear budget amendments. Review delinquency levels. Many underwriters view high delinquency, commonly above 5 to 10 percent of annual assessments, as a cash flow concern. Read CPA notes for contingent liabilities or one-time items.
Reading board minutes
Meeting minutes reveal upcoming projects and fiscal habits. Scan for:
- Discussions or votes on special assessments
- Deferred maintenance or postponed capital work
- Contractor selection, change orders, and cost overruns
- Disputes with vendors that could delay projects
- Budget increases, borrowing, or loans against reserves
- Mentions of litigation or code violations
- Collection policies for delinquent owners
Red flags to watch
- No reserve study, or one that is many years old
- Very low or zero reserves for an older building
- Recent large withdrawals from reserves without a plan to rebuild them
- Pending or newly approved large special assessments
- High delinquency or multiple units in arrears
- Ongoing or likely litigation that could become costly
- Repeated budget changes or emergency assessments
- Borrowing from other funds or unclear accounting
- Bylaws that allow large assessments with minimal owner input, or rules that make timely funding impractical
Pre-offer questions
Ask these questions early, especially in small Cambridge associations:
- Are there current or pending special assessments? Amount, purpose, and timeline?
- What is the current reserve balance, and where is it held?
- When was the last reserve study, and who conducted it?
- Have reserves been used to cover operating expenses?
- What are the current delinquency totals and number of units in arrears?
- Have assessments increased recently? By how much and why?
- Are there any known code violations, lawsuits, or claims?
- What capital projects are expected in the next 1 to 3 years?
- What is the policy for proposing and approving special assessments?
- Are there any association loans or loans between the association and a developer or owner?
- What percentage of units are owned by a single entity, and what is the owner-occupancy rate?
Due diligence steps
After you have a signed purchase and sale agreement, tighten your review:
- Obtain an updated resale or estoppel certificate close to closing
- Request recent contractor bids and contracts for ongoing projects
- If a project is planned, get documentation that supports the cost and timeline
- Confirm whether assessments will be due at closing and who pays per the contract
- Ask your lender about condo project eligibility and whether reserves or assessments affect approval
- If there is pending litigation, request counsel’s summary and estimated exposure
Contract protections
Discuss these protections with your attorney and lender:
- Financing contingency tied to condo project acceptability for your loan
- Due diligence contingency to review financials and minutes with a right to terminate for material findings
- Requirement that the seller deliver a current estoppel certificate and pay any unpaid assessments due before closing
- Escrow or holdback for disclosed but uncertain assessments
Lender and legal basics
Massachusetts condominiums are governed by the Massachusetts Condominium Act, M.G.L. Chapter 183A, plus each association’s master deed, declaration, bylaws, and rules. These documents define how assessments are imposed and collected.
Unpaid assessments can become a lien on the unit under the statute and governing documents. Large or recent special assessments can affect loan approval, and many mortgage programs review reserves, delinquency, owner-occupancy, and litigation before approving a project. Ask your lender early to avoid delays.
Insurance matters too. Large master-policy deductibles can lead to owner assessments after a loss, so confirm what the master policy covers and the deductibles that apply.
Next steps in Cambridge
Before you make an offer, review the current budget, recent financials, any reserve study, and minutes from the last year. For small or older buildings common in Cambridge and nearby Middlesex County towns, plan for extra scrutiny.
During your contingency window, order an updated resale certificate and confirm any assessments or arrears. If you see low reserves, significant deferred projects, litigation, or a large planned assessment, consult a condominium attorney for risk and strategy.
If you want a second set of eyes on a building’s financials, or need to shape a smart offer with the right protections, let’s talk. Schedule a private strategy session with Michelle Roloff.
FAQs
What are condo reserves and why they matter in Cambridge?
- Reserves are funds set aside for major capital projects, which helps associations avoid large one-time assessments for predictable expenses like roofs or façade work.
How do special assessments affect my mortgage approval?
- Large or recent assessments can impact condo project eligibility for many loan programs, so confirm with your lender early in the process.
Who pays a special assessment when I buy a unit?
- It depends on timing and contract terms. Assessments often attach to the owner when levied, so the estoppel and your purchase agreement determine who pays at closing.
What documents should I review before offering on a Cambridge condo?
- Request budgets, recent financials, reserve study, minutes, insurance summary, governing documents, disclosure of any assessments, and details on pending projects.
What red flags suggest a higher risk of future assessments?
- Very low reserves, no recent reserve study, high delinquencies, deferred maintenance, repeated budget changes, pending litigation, and unclear accounting practices.
Why are small Cambridge associations more likely to assess?
- Small conversions often keep dues low and underfund reserves, which increases the chance of incremental special assessments or delayed capital work.
