Condo Considerations

A condominium is typified by its multi-unit design including townhome, highrise, lowrise, and garden apartment styles.  A corporation represents the joint ownership of the individual unit owners .  Although condominium units may be more affordable and offer more living space for the money they are more vulnerable to downturns in the real estate market and are limited in their renovation options.  Condominium buyers include empty nesters, single women, first time buyers, and young couples looking for affordable alternatives and downsized quarters.

Buying a condominium presents some special problems that don't arise for single family home buyers.  The desire for reduced ownership responsibilities in living in a condominium complex is offset by the prospect of undertaking a complicated process to make a sound investment. 

The condo buyer must learn about any restrictions on the use of the unit, whether or not there are any special assessments voted on to cover extraordinary repairs such as leaking windows, the financial soundness of the complex, environmental problems such as toxic waste, planned repairs which may need additional assessments, and determine what services are covered by the monthly condo association fees.  For these reasons, experts recommend that you hire a knowledgeable condominium attorney who can ferret out the areas of concern that need disclosures from the seller, the real estate agent and the condo association.

The financial statement will give you a general picture of the condo association's financial status, including how much is in accounts payable and accounts receivable, and the size of the reserve fund.  You will probably want to review the minutes of the condo board meetings for the last year.  Discussions about plans for major repairs or improvements and special assessment to pay for them will be detailed.  In addition, your attorney will want to review the master deed, the bylaws and the budget, and ask if there are any recent lawsuits or judgements against the association, whether any by-law amendments have been proposed, and whether any recent engineering studies (both 'condition' and 'reserve') show the projected dates for repairs of the building and its components.  The condominium owners' association is generally elected to control and manage the overall affairs of the complex including maintenance of the common areas, exterior maintenance and trash pickup.

In the same manner that single family home buyers should visit neighborhoods to learn about the area, condo buyers should talk to condo owners to get a sense of how they like living in the development and what they are like.  When you have your condo unit inspected by the home inspector, don't be surprised if he wants to know about the condition of the whole building or complex because when you buy a condo you are buying the whole complex!  Repairs needed in a different building from the one you are considering are covered by funds from all of the owners so it is important to think about the condition of the whole complex when buying.  A poorly constructed development will just mean more frequent and higher priced repairs and renovations so look for a well-built complex.