Buying a Condo

Buying a condo can be an attractive alternative to a single-family home, especially for first time home buyers with a smaller budget or working professionals who don’t want the maintenance of a larger property. Condos may offer buyers more square footage for their money, and often provide additional amenities like an onsite pool or gym. However, if you are considering buying a condo, it’s important that you understand the responsibilities that come along with being a member of a Homeowner’s Association, and that you are aware of some common issues that might come up during your escrow.

When you purchase a condo or townhome, you will in most cases become a member of that building’s Homeowner’s Association. The HOA works as a governing body to help oversee the general maintenance of the building, to enforce set rules, to organize the budget and ensure the overall financial stability of the building. Most HOA’s will charge a monthly fee that covers a variety of expenses. Examples of what may typically be covered include exterior gardening and maintenance, water, trash, hazard insurance for the building, security, and the use and maintenance of recreation areas such as pools and tennis courts.

While the amount of the monthly HOA dues is usually posted in the MLS as part of the listing, there is a lot of information effecting the buyer that is NOT listed – and many questions may not be answered until the buyer has an accepted offer. As part of the sale, the buyer is entitled to review HOA documents, including the governing rules, HOA bylaws, and notes from the past 12 months of HOA meetings. Unfortunately, most HOAs charge a “document preparation fee” for copying all the necessary disclosures, and will not give out documents until after the buyer has a signed contract. Because of this, it is very important that buyers review HOA documents as soon as they become available so that they have the option of walking away from the sale before removing their contingencies. Here is a list of questions that buyers should look into before committing to a condo sale:

What are the monthly HOA dues and what do they cover?
Are there any planned or contemplated special assessments coming up?
What is the amount of the building’s capital reserves?
What is the delinquency rate for past due HOA fees?
Are there any restrictions – such as pets, smoking, etc?
Is the property professionally managed?
Is there a limit on the number of units in the building that can be rented at any given time?
Is the building FHA approved?
How comprehensive is the master insurance policy – is it enough to cover an entire building rebuild?

Buying a condo can be a complicated process – so it’s important that you understand what you are agreeing to before completing your purchase. If you have any questions about buying a condo or townhouse, or about the market in general, feel free to contact me!