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Condominium Warranty Bonds for New Construction


Condominium Warranty Regulations is a program in DC that helps protect buyers of newly constructed condominiums.

Condominium Warranty Regulations, a program launched a few years ago in D.C. aims to protect buyers of newly constructed condominiums. It stays in effect for two years after the settlement date of the first condo in the new building. What happens is 10 percent of the total cost of construction is put aside as a condo warranty bond. The Department of Consumer and Regulatory Affairs (DCRA) and your respective condo association can ask for money from it to aid in structural issues to your unit that may come up.

It is important to remember a couple key pointers, when buying a brand new condo, especially given the amount of real estate that has been popping up in key areas in D.C. like the Southwest Waterfront and Petworth.

The developer of the condos is able to manage the building during its two-year warranty bond period. Buyers should be cautious of this conflict of interest, although it is in fact legal. Developers want their entire warranty bond back after the two-year period, so more often than not condo owners will have their interests overlooked. Basically, if you’re looking for condos, especially in those newly developed areas in D.C., beware of buildings where the developer and manager are the same person.

Developers/managers are also allowed to use their own inspectors for the building. Another way to protect yourself is to insist on having a private inspection done by an inspector of your choice. They will take your interests into account and not those of the developer/manager. You’ll be able to find out quickly and easily, if the property isn’t up to code. If the property isn't up to code in terms of structural issues, you should have a case to access the warranty funds being held by DCRA.

More information on the Condominium Warranty Bonds process for newly constructed buildings. Don’t hesitate to contact us by filling out the form below with any concerns or issues.

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Photo: DistrictRE

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