Buying A Condo? Here's What You Need to Know
By Teresa Ambord
Thinking of buying a condo? Condos are the near-perfect answer for many people on both ends of the age spectrum. Young people may want to be homeowners but don’t have a lot of resources, don’t need a lot of space, and work a lot of hours so they don’t want to spend their free time mowing lawns and maintaining the outside. Likewise, seniors who have outgrown the need for a big house and want a low-maintenance, smaller home find condos to be a good solution.
As long as you don’t mind sharing, many condos provide a lot of amenities that you might not otherwise have, such as pools and spas.
The downside? The downside includes shared walls, which can be a problem if neighbors are noisy. Parking is usually limited. Neighbor’s pets may be messy if the owners aren’t mindful of them. And if the property management is inadequate, the common areas may suffer. But the most common problem with condos is the construction defects, particularly the exterior.
Why is this a bigger issue for condos than for homes? Because there is simply more exterior, more roof, more outside walls, more windows and doors and vents and seals, and that means more opportunity for weather and water to infiltrate.
Still, the demand for condos is rising, and some seasoned condo owners swear by them. In a recent 12 month study in Washington state, sales of condos were up 12-14 percent, and the time it took to sell a condo had significantly dropped.
Here’s what condo owners advise if you are looking to buy:
Walk around the premises and notice the condition of common areas to see how they are maintained. Talk to as many owners as you can to see if they are happy with the association, if the neighbors get along, and most important, would they buy there again? Board members may also be eager to provide information.
Before you buy a condo, ask the association for any documentation you can read about the development.
You should look at:
- CCR (covenants, conditions, and restrictions) that spell out rules, such as quiet hours, pet regulations, parking limitations.
- Declarations: published by the developer and gives key facts, such as the number of units and parking spaces.
- Minutes and agendas of board meetings: to see what topics members are concerned about.
- Public offering statements: written by the builder, lists their five most recent other condo projects, and details common amenities, such as a pool, and assessments that are known.
- Resale certificate: this is generally provided by the unit owner and includes such details as the current budget, available reserves, expected assessments, and current litigation.
- Reserve study: the reserve study, assuming there has been a recent one, gives clues about the condition of the complex. After a physical inspection and an economic needs analysis, the reserve study should show whether the complex has the financial reserves to cover large expected expenses, such as periodic roof repairs and replacement, and repaving. If there is no recent reserve study, you may want to step back from the deal. Here’s why; reserve funds are created from association dues paid by the members. Those funds pay the cost of repairs. Suppose there is a major storm that damages the roof beyond repair. Keep in mind, this is a very large roof. If the reserves are inadequate and insurance doesn’t cover it, who will pay? Most likely, the tenants will be assessed the cost by paying their share. This could be many thousands of dollars.
Here are some points to watch for:
- If the dues are very low, as is sometimes true with new developments where the sellers are eager to entice buyers, there’s a good chance those fees will significantly increase soon.
- If the property isn’t appreciating over time, it’s probably a bad investment.
- If the common areas are not well maintained, the owners may be looking at big assessments coming up, or else the management is poor.
