When you think you've found the perfect unit, you have your down payment ready, your going to call the mortgage lender and you're ready sign on the dotted line, hold off for a moment. Are you sure you are completely prepared to buy into a community property? Do you know everything there is to know about your future home? Are you really ready to buy into a condo association?
Documented Problems
One of the best places to look for hidden dirt on your future home is in the minutes of the condo association board meetings. Anyone with complaints will likely come before the board and if you notice several of the same complaints, you may be buying into a lemon or simply a property that is poorly managed. You don't want to be part of either one.
Condo Delinquencies
Has there been a history of missing payments from your future neighbors? You should be able to find the delinquency records for the building. High rates of delinquency, or even moderate ones, are a sign of bad things to come. One problem is that the condo owners are having financial trouble which can lead to more distressed sales that bring down prices. In addition, when the condo owners are delinquent less money is paid into the project for common area maintenance and expenses.
Condo Repair/Reserve Fund
Owners pay into a repair and reserve fund. Research the fund to see how much it contains. Older properties should have as much as 50% of the estimated costs of refurbishing the building and grounds in the fund for planned improvements, new fixtures or roofing, and emergencies. Newer buildings should have at least 10-25%. Make sure to carefully review the condition of the property, not just the unit you intend to buy but the exterior of the building and the common areas as well.
Condo Association Insurance
Make extra sure you take a look at the insurance on the property. Find out if replacement costs and costs of rebuilding are correct and find out if the property has a building ordinance clause. This pays for improvements to the building to bring it up to date as ordinances change. You should also be sure you know how much of your unit and personal property is covered by the building insurance policy and be sure to make up the difference with your own insurance.
Legalities
Utilize the services of a real estate lawyer to work through all the paperwork and condo bylaws of the condo association to be sure everything is up to snuff. The laws should not only make sense for the units, they should also be in line with state and local laws as well. Your lawyer can also head over to the local courthouse to check and see if any suits have been brought against the property.
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