Buying a Condo? 6 Things you Must Know

Buying your dream condo or a night mare?

6 things you MUST know to make the right decision

This is the first of 2 articles about important facts that you need to consider when buying a condo. 

You are ready to buy your new home, a condo is your best choice either for the lifestyle or your budget… be mindful that if you don’t do your homework upfront, your quality of life and the financial consequences may have you losing sleep over it.

These are the 6 things you want to know about the building.

 1.     Restrictions that affect your life in the building an your investment

What are the building’s restrictions?

Some of the common restrictions condo associations have are:

*Rentals: ability to rent the condo and minimum length of leases. Some associations do not allow leases and most allow only one or 2 year leases; others even though rentals are allowed cap the number of units that are leased at the same time.

*Pets: some buildings do not allow pets, and when they do they limit the number and the weight of the pets that you can keep in the unit,

*Length of stay for guests before having to apply for an association approval.

*Parking, the number of available spaces and the type of vehicles that can be parked.

*Minimum Down Payment required if you are buying with financing.

Knowing upfront this information will help you see if there is a match between your needs and the building.

2.     Upcoming Assessment

How old is the Building, and is there  any required large work needed?

Some buildings have major repairs that are due but not approved by the association yet… most of the times the property manager will be able to tell you if there in something pending to be approved in the near future.

If a building is 40 years old or close to that age it will need to be recertified*. Depending on the conditions of the building, the costs involved in the recertification may be extremely high, and unless there are enough reserves a special assessment may be required. The purpose of the recertification is to ensure that the structure is safe.

You may be ok with this, but you will have to plan your finances accordingly.

3.     Payment of Current Special Assessments

Who will pay for the current assessments?

If an assessment is in place the seller may expect that the buyer will pay the amount due after the closing date.

It is customary in negotiations for the seller to pay it all if the assessment was due to structural or maintenance work, and that the buyer pays if it is for beautification or upgrading of the building that he or she will enjoy.

4.     Delayed Condo Approval

Is there an association approval? How long will it take? What they require?

All condo associations require the owners and the prospective tenants to get approved by the board. The process, as well as the time for the approval, varies. Some associations are more strict than others regarding income and credit scores; most VERY strict regarding criminal background.

A personal interview may be needed… and it may be required to be in person. I have seen situations in which this has been an unexpected issue for out of town buyers.

You won’t be able to close until you receive the condo approval… be diligent to avoid any delays.

5.     Nuisances

Is there any work in process or being done in the near future to the building?

Not only because it is important to know if there will be an assessment, but because you want to know how long it will take and, what areas will not be able to be used.

You don’t want to move to a building to find out that the pool or gym will be closed for 3 months or that you will be suffering with loud construction noised or dust.

6.     Extremely High Association Fee

How much is the Association Fee and what is included?

Association Fees vary depending on the amenities and the services they provide. A building with a 24hr concierge and large common areas, that need to be maintained, will have a more expensive fee than one that has none of them. Determining what services you will use, will be something to take into consideration when deciding where do you want to buy.

Building with relatively low association fees, with reserves and well maintained are very attractive to potential purchaser.

Restrictions, Current and Upcoming Assessments, Condo Approval timing, Nuisances and the Association Fees information are critical when you are choosing your next home!

Most of this information can be found in the condo docs, the  rules and regulations, the budget, a the financial statements. They MUST be provided by the seller, you may ask for them even before signing a contract. Review them carefully before you spend any money, ask for extension on the other periods if needed!

Asking the right questions upfront will help you make an informed decision.

If you have any questions please don’t hesitate to let me know…