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10 Things You Need to Know Before You Buy a Condo

By Sharon Alters

Real Estate Agent with Coldwell Banker Vanguard Realty - 904-673-2308

September 30, 2009 02:39 PM

10 Things You Need to Know Before You Buy a Condo Todd Clark inspired this post when he wrote about doing your homework before buying. Todd did some investigating and gave them the information they needed to know before buying a condo. They decided not to sell their home and buy a condo when they found out Todd's research.

10 Things you Need to Know before you buy a Condo:

1. Get a copy of the Association Homeowners Documents and read them carefully.

2. Who is in charge of the Association - Developer or Homeowners? Who is on the Board of the Association?

3. Who is the Management Company?

4. Get a copy of the Annual Budget and check closely for how much money is in the Reserve Fund and how much is being set aside annually. Is there a plan for how much it will cost to paint, landscape, replace the roof, pave roadways (if gated), maintain amenities and common areas, etc.? Know where the money is going.

5. Are there any lawsuits pending? These can be between Residents and Association, Developer and Contractors, Association, Residents and Contractors. Are there any liens against the Condominium, Developer, or individual unit for sale?

6. How many owners have defaulted on their Association dues? Over a certain number of defaults and the property will not be eligible for FHA financing.

7. Are there any Assessments at present or any in the future that are now known? If so, how much and for how long?

8. Have an attorney or title company do a preliminary title search to validate what the Developer, Association, Seller or their agent tell you. Be sure they check the Developer also if they are still in control of the property.

9. Talk to some residents to find out how they like living there and how they rate the Management Company and Homeowner's Board.

10. Be sure you understand what the owners are responsible for in maintaining the unit - and by all means, have a building inspection to determine the condition of the unit and any maintenance that needs to be done.

Condo living can be great and at today's prices, buying a condo makes sense for many people. Investors can have positive cash flow even with Association monthly dues.

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Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239

Real Estate One - Commerce, MI

Michigan homes for sale ~ yesmyrealtor@gmail.com

There are quite a few condos in trouble. Luckily some of the mortgage companies questionaires weed out some of the bad ones.

Sep 30, 2009 02:42 PM

Sharon Alters

Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL

Realtor - Homes for Sale Fleming Island FL

There are, Russ. That's why it's so important to get the information up front to know what you are dealing with.

Sep 30, 2009 02:44 PM

Mirela Monte

Buyers' Choice Realty - North Myrtle Beach, SC

Myrtle Beach Real Estate

Sharon: Great post! I've encountered some horror stories. As a matter of fact, one of my very first transactions when I started selling Real Estate in '88 was such a story: I sold a condo to a man. He called me about two weeks after closing on it. Apparently he wasn't allowed to park his truck on the premises. He had two choices: to sell his new condo, or buy another car. He chose to park on the street and walk about a quarter of a mile to his condo instead.

I felt horrible about it all. After that, I studied everything there was to study about condos. Now, 21 years later, I have an ironclad addendum I incorporate into every offer. It gives my buyers everything they need in order to make an educated decision about their new abode. My Buyers love it and I've never had a bad surprise ever again...

Sep 30, 2009 05:03 PM

#8 is not necessary here. The Master Deed and the CC&R's are recorded documents & we ask for all the addenda incorporated after the original recording. The seller usually pays $50 to $100 to get copies of it all from the company managing the HOA.

One very important piece of the puzzle: The minutes to the latest two annual meetings. Read those minutes as if they were a best seller. In them you will find clues to future assessments, pending problems,etc.

Another very important part: Make sure the HOA fees pay for the building insurance. If not, they will be billed separately and they can be quite costly.

Because I sell a lot of condos I usually know where the problematic ones are. When I'm not familiar with a project, I typically find the maintenance engineer and just chit chat with him. You'd be surprised at what you can find out from him....

Sep 30, 2009 05:13 PM

One more thing: the certificate of insurance for the building. Find out just how adequate it is (the lender usually does that anyway, but just in case...)

Sep 30, 2009 05:15 PM

Mirela, thanks so much for your comments. They add great value to this post. There are some wonderful condos and there are definitely some to be avoided. You should write a post on this topic as well - and share what you have in your Addendum!

Oct 01, 2009 12:06 AM

Mirela, the reason I included #8 is from my own personal bad experience. I sold a condo to a lady where there was a recorded lien but the title came back clean - because they had posted a $1000,000 bond on a $500,000 claim. We were both stymied when she found out - by getting a letter enjoining her in the lawsuit, as an owner.

If we do our own independent title search, we will find out issues that a title company/attorney representing the Condo will not disclose.

#11 Ask if there are any undiscilosed liens that are being covered by title insurance because of a bond posted.

If we had known about this lien, she would not have bought the condo. She has pursued it with the bank and there is a law suit about this nondisclosure, so we have been told.

Oct 01, 2009 12:16 AM

Ann Allen Hoover

RE/MAX Advantage South - Hoover, AL

CDPE SRES ASP e-PRO Realtor - Homes for Sale - AL

This is helpful information. I deal mostly with single family homes, but this is a great checklist for those wanting a condo.

Oct 01, 2009 08:25 AM

Jon Wnoroski

America's 1st Choice RH Realty Co., Inc. - Green, OH

Summit County Realtor

Great points made on buying a condo. Each Association is different and the services included in your fees vary (considerably). Thanks for a great post.

Oct 01, 2009 11:41 AM

Ann, thanks.

Jon, yes each one is different and it is important to know the services included. Thanks.

Oct 01, 2009 01:23 PM

10 Things You Need to Know Before You Buy a Condo

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