Think you would like to buy a condominium? Great. We can help!
But it’s so much more than price, number of bedrooms, location, etc. When you buy a condo, you are choosing to live in a shared community. You will have some responsibilities as an owner in that community. So how do you decide which community is right for you?
Here are some questions to ask before you buy:
What are the rules and regulations? Obtain a copy of the Declaration of Condominium (a.k.a. CC&R’s, Covenants, Conditions & Restrictions). But don’t just obtain a copy. READ IT. Many home buyers find out after the sale that there is some rule that would have made them decide not to buy there. Or worse, the home buyer violates a rule and receives disciplinary actions from the association.
Some common rules you should verify before buying:
How much are the monthly/quarterly/annual fees and WHAT DO THEY COVER? It is not enough to just compare the amount of the association fees of various homes. The amounts vary greatly and some fees cover A LOT.
Some expenses that may be covered that you might have to out-of-pocket otherwise: cable TV, internet, water, sewer trash, building and roof maintenance, building insurance, flood insurance, pool and recreation facilities, pest control, lawn and yard maintenance, security, luxury amenities (concierge, valet), reserves (more on this later) and more.
Condo and homeowners associations are registered as non-profits, so the payment of these fees is not a profit center for the association. The fees are just a shared percentage of running the community as a whole.
Ask for a copy of the most recent financial statements for the community. Are the fees they are collecting enough to cover their expenses? Are there a lot of unit owners who are delinquent in paying their fees? If the association is barely collecting enough to cover the costs and even one unit owner stops paying their fees, guess what? The other unit owners (this could be you) have to make up the difference. That leads to the next topic…
As a general rule, associations can impose a special ‘assessment’ (a.k.a. bill) to the unit owners when the income generated from fees and other sources does not cover the expenses. This can happen when some owners are delinquent in paying their fees, the association did not plan for future expenses adequately, or when some kind of unforeseen, catastrophic event occurs. To avoid these unpleasant, surprise needs for funds, associations must calculate prudent reserves (see next topic).
Building and common area components naturally age over time and need repair and replacement. Communities must plan for this and start collecting monies now for what will need to be updated in the future. When considering the purchase of a condominium, ask to see the schedule of reserves. Also ask when was the last time the community had a reserve study completed. If it was more than 5 years ago – PROCEED WITH CAUTION.
Our agents know the ins and outs of buying and owning a condominium. We will guide you through the process of evaluating the condominium unit and community to make sure you make the right choice.