So You're Looking for a Condo
Condominium living offers many benefits:
- You don't have to concern yourself about exterior home maintenance anymore. Bye-bye lawn equipment and extension ladders.
- You own a real estate asset that provides the same tax benefits and appreciation possibilities as any home.
- There is frequently an enhanced sense of community in a condominium development versus a detached home neighborhood
But before you take the plunge, you owe it to yourself and your family to get answers to the 7 questions below.
- What is the financial health of the development? You have the right to examine the current financial statement of the condominium association of your prospective development. Your real estate agent can procure this for you. This is done after there is an agreement of sale in place and the agreement should allow you to exit the deal and receive back your earnest money if you are not satisfied with what you find. You want to look at the operating budget and see what kind of cash reserves exist. There are always common items needing repairs of some kind. If there are no cash reserves in place the association will need to assess all owners for their portion of the repair. This can result in sudden unexpected expenses for unit owners.
- Are there any special assessments currently in place? As noted in the previous point, sometimes unexpected or costly repairs are needed to the common areas or infrastructure of the development. Perhaps the roof or exterior facade has been damaged by a storm or the furnace is being replaced. Under these circumstances and in order to pay the bills expeditiously, the condo board will assess each owner the fractional amount they owe. Sometimes, such expenses are paid at one time and sometimes in installments. Of course, you want to know if there are any current assessments for which you would be liable. This information should be noted in the listing but isn't always. Your agent can find out this information.
- What one-time fees are due at settlement? It's frequently the case that one-time fees such as a capital contribution, move-in fee or special assessment are due upon purchase. Capital contributions are usually some multiple of the monthly condo fees. A move-in fee is usually a set amount. Again, you need to know about any such expenses and they are not always clearly communicated in the listing. Part of your agent's job is to nail down the specifics of such charges.
- What does the monthly condominium fee cover? These items should be listed under 'Association Fee Includes'. Some items are almost always covered such as trash removal, sewer fees, exterior maintenance and lawn care. Others are covered by some developments and not by others. It's common for developments composed of unit/flats-think apartments-to include utilities such as water, heat and/or electricity. This is less common for townhouse condos. It's important to know what's included to get an idea of your monthly expenses.
- What parking spaces are included with the unit? Parking facilities in a development may include garages, parking lots and driveways. Mid-rise (4 - 6 stories) and high-rise (7+ stories) frequently have an underground garage. Townhouse condos sometimes have their own garage and driveway and other times do not. Most complexes have a private lot of some kind. If there are no parking facilities the listing will state that there is 'street' parking. Thanks. What is frequently unclear is how many spaces are allocated to a given unit. This may vary by unit. For example, a given unit may be entitled to 1 space in a garage and 1 space in a lot and another may get 2 spaces in the garage. You will see the term 'deeded parking space'. In this case, the space may be a separate entity that may be bought or sold or may be associated with a given unit. You will also see the term 'assigned space', meaning the condominium board has assigned a given parking space from a garage or lot to a given unit. As you can see, this can become complicated. Also, there may be fees associated with parking, separate from the monthly association fee. Once again, your agent should be able to find out the specifics.
- What common amenities exist and what is my access to them? Larger complexes will often have common amenities such as swimming pools, exercise rooms, social rooms, clubhouses and the like. You'd need to know what those are and if there are fees associated with their use. Access to a pool, for example, may be covered by the condo fee, but use of a cabana may have an associated fee.
- What are the rules with respect to pets? This varies significantly from development to development, with some complexes not allowing pets of any kind, others allowing pets with restrictions on the size or number and others having no restrictions. If you have a pet this is obviously very important to you. In general, low-, mid- and high-rise buildings of unit/flats are more likely to have restrictions than are townhouse condos.