Condominium Buying Checklist
Thinking of buying a condominium instead of a house? This guide points out some concerns specific to condo purchases. Buying a condominium is a good idea if you:
Condominium housing is usually typified by its design and ownership structure; condominiums are a single unit in a multi-unit building or a complex of buildings. A corporate entity, either a Board of Managers or Condominium Corporation, represents the ownership of the individual unit owners. Owners of condominiums privately own their own interior space, and collectively own all the common areas around the complex such as grounds, walkways, recreation areas and parking lots.
If you do decide to buy a condominium, it is a good idea to secure a real estate agent and a lawyer who have experience in condominium sales. Keep in mind that in the real estate market, condominiums are much more vulnerable to downturns. They are usually the first to drop and the last to recover.
As a rule, the Board of Managers has what is called "right of first refusal", which is the right to purchase or lease the unit from the owner should they decide to put it up for sale or lease. This right is usually never exercised. You can probably judge if you like the style of the management by looking at overall condition of the complex. Walk around the complex. Look at building exteriors, lobby, grounds, garages and recreational facilities. Everything should be well maintained. Your monthly condominium fee goes towards these expenses.
Visit several owners and ask them if they are happy with the way the complex is run. Ask if there have been any major repairs or improvements and if so, did the owners have to pay extra in the monthly fees for them. Ask if the condominium fees have increased a lot each year, or do they remain consistent with inflation.
Check if the condominium is well constructed. Visit when the neighbors are home and listen for noises through the walls. If you hear common level noise then the walls are not sufficiently soundproofed. Get a copy of the Rules and Bylaws of the condominium from the managing agent. Most rules are just common sense guidelines regarding noise and parking. Make sure there are no restrictions that will conflict with your lifestyle.
Check what the monthly fee is and what it is comprised of. Compare that fee with other condominiums in the area. Some complexes may have a more efficient management and therefore have lower fees. Try to avoid condominiums that include utilities in their fee, as this is the most expensive way to pay for utilities. Usually the fee is structured to cover the most wasteful users, and thus you could be subsidizing these people.
Once you decide on a condominium, an application is submitted to the Board of Managers. This application will include a request for financial information (complete tax returns for the past two years and a financial statement), as well as a request for personal and business references. Make sure your financial information is complete. The application process can take a while, and the managing agent will not submit requests to the Board if the information in the application package is not complete.
Once your application is submitted to the managing agent, an interview will be arranged between the potential buyer and a committee of the condominium. You should know if you are accepted a day or two after the interview. If your financial information is fine, there is no reason for the Board to turn you down; they can, however, exercise their right of first refusal and purchase the unit. If you are approved, a closing is scheduled. Closings are usually held at the office of the seller's attorney. You will receive a master deed, or Declaration. The Declaration is an important legal document that sets forth details such as voting rights, property description, common elements, and percentage of elements each unit owns and the operation of the association. Bylaws, which are integrated in the Declarations, cover in detail the duties of the Board, conduct of meetings and elections, preparation of budgets and enforcement of rules and regulations.