The building's
annual report
Every co-op and condo publishes financial statements, and almost no buyer reads them. Twenty minutes with the numbers predicts charges, assessments, and board quality better than any lobby renovation.
Before you read on
- General information as of August 2026.
- Not accounting advice — your attorney and accountant review formally; this guide makes you a competent reader.
- The five red flags in Section 4 are the minimum takeaway.
Point 1The documents and where they come from
Buildings produce audited annual statements — balance sheet, income and expenses, reserve disclosures, auditor's notes — plus current budgets and, on request, board minutes. Your attorney obtains them in diligence; serious buyers read them before falling in love, since they are obtainable through the listing agent for the asking.
Co-ops add the corporation's own mortgage to the picture: the underlying loan whose interest flows through maintenance and whose maturity date schedules a refinancing event. Condos have no underlying mortgage but the same reserve and arrears anatomy. Both are legible with one framework.
Point 2The four numbers that matter
Context calibrates each: a prewar with a fresh facade cycle can run leaner reserves than one with scaffolding ahead; a building mid-assessment shows odd income lines that are strength, not weakness. The auditor's notes explain most anomalies — read them rather than guessing.
| Number | Healthy shape | Warning shape |
|---|---|---|
| Reserve fund | Meaningful months of charges; funded plan | Thin, shrinking, or raided for operations |
| Arrears | Few units, small sums | Rising share of units behind |
| Operating result | Roughly balanced, honest budgeting | Chronic deficits patched by transfers |
| Underlying mortgage (co-ops) | Sane balance, distant maturity, fixed rate | Balloon looming or rate reset unpriced |
Trends beat snapshots: request two consecutive years and read the direction.
Point 3What the numbers predict
Reserves against the capital plan predict assessments: the gap between what FISP, boilers, elevators, and Local Law 97 will cost and what is saved arrives later as your bill. Arrears predict charge increases — every non-paying unit's share lands on the paying ones. The underlying mortgage's maturity predicts a step-change in maintenance whenever rates have moved since the last refinancing.
Board quality is legible between the lines: honest budgets, funded reserves, and minutes that discuss problems before they are emergencies mark buildings where your monthlies buy management, not drift. The financials are the board's report card, published annually, read by almost no one.
Point 4The twenty-minute read
The sequence: auditor's opinion first (qualified opinions are shouted warnings), then reserve balance against monthly charges (months of cover), then the arrears note, then — co-ops — the mortgage's balance, rate, and maturity, then two years of operating results for direction, and finally the notes for litigation, sponsor concentration, and commitments. Twenty minutes, one page of your own notes.
Five red flags that end deals or reprice them: qualified audit opinions, reserves under a quarter-year of charges with capital work visible, double-digit percent of units in arrears, balloon maturities inside two years at legacy rates, and litigation notes involving the sponsor or the structure. Any one is a question; two or more is a price conversation your attorney leads.
Through the listing agent or managing agent during diligence — your attorney requests them as a matter of course. Two consecutive years plus the current budget is the useful set.
Rules of thumb say meaningful months of charges plus a funded capital plan; context (recent capital work done or looming) calibrates it. Thin reserves before a facade cycle is the classic pre-assessment shape.
Non-paying units shift their share onto paying owners through increases and assessments. A rising arrears trend is a building-wide cashflow warning.
The corporation's own loan on the building, serviced through maintenance. Its maturity schedules a refinancing whose rate environment can step maintenance up — check balance, rate, and date.
The auditor is flagging something material — going-concern doubts, unresolved issues. Treat it as a stop-and-investigate, not a footnote.
Yes — mandates like LL97 and surprises exist everywhere. Good financials mean assessments arrive planned and financed rather than panicked; that difference is worth paying for.
RELATED GUIDES
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Send us the statements from any building you are circling — we will return the twenty-minute read with the flags marked.
Important notice
The figures on this page are general information as of August 2026 and do not represent an offer, a quote, or a guarantee of any transaction terms. Reinvent NY does not provide legal, tax, or investment advice. Confirm anything material with an attorney and a CPA before you act on it. Nothing here is a solicitation to invest, and no return is promised. Real estate brokerage services are provided through R New York.