Condominium Considerations

If you are thinking of purchasing a condominium, you should be aware that there are some differences between owning a home and owning a condo.  During your condominium search, you will hear different language that may be new to you.  Hopefully, these definitions will help make sense of this real estate talk:

Condominium:  A form of real estate ownership where the owner receives title to a particular unit and has a proportionate interest in certain common areas (hallways, parking lots, clubhouse, lawns, etc.).  The unit itself is what you are buying, a separately owned space whose interior surfaces (walls, floors and ceilings) serve as its boundaries.

Declaration and Bylaws:  This is a legal deed that sets forth the sponsor’s intention to create the condominium, and covers such things as voting rights, owner’s responsibilities, restrictions on pets and property usage, and who pays for what. 

Association Dues:  Dues are paid by each condo owner on a monthly (usually) basis, and may cover such things as management services, building maintenance and insurance, common utilities, water, sewer, trash, snow removal, TV cable, gas and electricity.  Dues vary by complex, so be sure to check not only the amount you must pay, but also what exactly you are paying for.  The more items covered by dues, the fewer bills you must pay each month.  Note:  If the dues cover buildings insurance, then you would not be required to purchase Homeowners Insurance, but it’s still a good idea to get Contents Insurance which covers the personal property; appliances, carpet, cabinets, etc.

Special Assessments:  When there is not enough cash in the association’s reserve accounts to meet an emergency, or to fund an improvement, all condo owners may need to contribute more than their usual dues.  The assessment may be just one time or spread out over several months.  As the condo buildings are getting older, we are seeing this more often.

Amenities:  Many condominium complexes have clubhouses, pools, hot tubs, game rooms, laundry rooms, picnic areas, etc. that are owned by the association, and are funded by association dues.  Generally, condos with more amenities have higher dues, as well as higher rental income potential. 

Right of First Refusal:  Some condominium associations have a rule that after an offer is accepted then a notice is given to the other owners in the complex.  The other owners have the right to purchase that unit at that negotiated price.  The other owners do have a time limit to respond to the first right of refusal, its set by the association documents.