There is much to know when considering the purchase of a condominium. Research up front will make for happy unit owners after closing!
1. What is the condo fee?
The condo fee is a monthly charge that is used to run the condominium.
2. What does the condo fee cover?
The condo fee covers day-to-day maintenance, the master insurance on the buildings, trash removal, landscaping, snow removal, repairs to roadways, and more. The condo fee should also cover a payment to the reserve fund for future replacements.
3. How much money is in reserve?
There is no exact formula for what is the correct amount to be put into reserve each month; however, condominium complexes with a stable condo fee that look to be in good shape are generally putting enough away. A reserve study is done by some associations to be sure the expenses and reserves are adequate for the foreseeable future.
4. Are there any special assessments currently?
A special assessment is one that is collected for either an unplanned expense when there is not enough in the reserve fund or not planned into the operating budget. Snow assessments have been common in extra snowy winters. This is collected above and beyond the monthly fee.
5. Have there been special assessments in the past and for what?
Lenders do not like to see a lot of special assessments as they believe that budgets are not being planned correctly even though buyers like to see low condo fees. But if they are too low to run the condominium adequately, special assessments will happen or the property may go into decline. It's like the commercial with the man with the muffler – you can pay him now or pay him later.
6. What do I own on the exterior?
This is stated in the condominium documents – in some communities, garage doors or decks are common area and are thus covered by common expenses – in others they are owned by the unit owner.
Generally, central A/C units, windows, skylights, bulkhead and slider doors, and the items that service only your unit are yours. And, before you decide a condo fee is too high, be sure you know what it includes!
7. How is the condominium managed?
Basically, there are two ways – a condo complex can be self-managed by a group of trustees or it can be managed by an on site or off site professional management company who reports to the trustees. Again, be sure to review this form of government in the condo docs.
8. What are the rules and regulations I must live by?
A part of the condo docs are the rules and regulations. These ensure that unit owners know what is expected of them and what they can also expect. Be certain you understand and can abide by them or you will be an unhappy unit owner. These rules and regs are made with uniformity, safety, and consideration to other unit owners in mind, given a more dense form of housing than a single family home.
Condominium life can be fun and enjoyable for those that prefer to read a good book, have a great day of tennis, golf, or travel rather than mow, garden, or shovel. I have lived condo life for 24 years now so if you really want to know what it's like and what your choices are just give me a call!