Ten Things You Should Know Before Buying a Condo

1.      What is a condo?  It’s a separately owned space whose interior surfaces serve as the boundaries.  You will also own a share of the common area of parking lots, hallways, clubhouse, lawn, etc.

2.      Be sure to check out the Declarations, By Laws, Rules and Regulations.  These are the documents that created the condominium, they cover things like your voting rights, owner’s responsibilities, restrictions, etc.  The rules may restrict things like charcoal grills on the decks, short term rentals or pets. The condo documents should also answer questions like; who maintains the deck.

3.      Association dues are usually due monthly.  What the dues include depends upon the association.  They may include water, sewer, cable TV, gas heat, building maintenance, trash dumpster, insurance on the building, snow removal and management services.  Dues vary by complex, if the association has pools, hot tubs, elevators, etc to maintain they will be higher.  Even if the dues include the building insurance you will want to get insurance to cover the interior of your condo.

4.      The association budget is another item to be sure to review.  The association should be collecting enough to pay the bills plus setting aside money for repairs and improvements that will need to be done in the future. Items like boilers and roofs should have a plan for repair.

5.      Read the minutes for the annual condominium association meeting and board meetings.  Those will tell you what is concerning owners, the future upgrades and improvements.  If they are thinking about an assessment or if enough money is in the reserves. 

6.      Speaking of assessments; as the complexes get older more repairs need to be made.  Updating of the common areas may be necessary to keep up the property (and the values too).  By reading the minutes and talking to board members you should have an idea if an assessment is due in the near future. 

7.      Some association documents have a first right of refusal.  It was more common back in the 1960s and is rare in a newer complex.  What it usually entails, is after the buyer has an accepted offer, a letter goes out to the owners in the complex with the price and terms.  One of those owners could take up the first right of refusal (at the great price you negotiated) and you are out of luck.  Some associations are changing their By Laws to remove the first right of refusal because it makes getting a loan on the property more difficult.

8.      What amenities does the complex have?  A pool, hot tub, game room, tennis courts, elevator, etc might be something you would like, but they also increase the constant upkeep of the complex. 

9.      When not using the condo yourself are you going to rent it out?  The association may have restrictions on certain types of rentals.  Some do not allow short term rentals. 

10.  Financing can be a challenge depending on the complex.  Figure you will have to put at least 20 to 25 % down for a new loan.  If the complex has a front desk, time shares and/or commercial space on the ground floor you may have to go to a “portfolio lender”  where you may need more down and have a higher interest rate.