Florida Broker Practice Exam

What document must be prepared and provided to prospective purchasers if there are 20 or more condominium units?

1. Bylaws of the association

2. Prospectus

3. Estimated operating budget

4. Governance form

The correct answer is: Prospectus

When there are 20 or more condominium units, the law requires that a prospectus be prepared and provided to prospective purchasers. A prospectus serves as a detailed guide that outlines essential information about the condominium project, including its characteristics, the rights and responsibilities of unit owners, and any financial obligations or assessments. This document is crucial for ensuring that buyers have all the necessary information to make informed decisions about their potential purchase. Furthermore, the prospectus also covers aspects such as the physical characteristics of the property, the condominium association’s rules, and any potential risks. It is designed to protect buyers by ensuring transparency from the developer about what they can expect from their investment. Other documents, such as the bylaws of the association, the estimated operating budget, and the governance form, may also provide valuable information to prospective buyers but do not replace the requirement for a prospectus in this context. The prospectus encompasses a broader range of details, making it the critical document mandated by law for developments with multiple units.