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Buying A Condo? Be Sure To Do Your Due Diligence About The Development You Are Buying In

Jul 24

filed under: 2nd Home Buyers, Buying A Home, Real Estate

Condos can definitely have their advantages over owning a single family home. For a vacation property or second home they are often the preferred dwelling choice. Not having to take care of outside maintenance such as replacing a roof, painting the exterior, lawn care etc. goes hand in hand with this type of turnkey property. They can also be great for a first time buyer that does not want the upkeep that comes with owning a single family property.

If you are thinking that owning a condominium is the right choice for you then you need to do  some due diligence prior to solidifying your purchase.  Often what I am about to tell you cannot be done until you have found the condominium you want to buy and have entered into a purchase agreement. That said you should have approximately 10 days once you have done that to find out a few things that are very important.

Covenants, Conditions & Restrictions The “CC&Rs”

First you want to be sure you have taken the time to read the Covenants, Conditions and Restrictions, better known as the CC&Rs. The CC&Rs are recorded against the property and generally empower a homeowner’s association to control certain aspects of property use within the development. When you purchase a property in such a development you agree to be bound by the CC&Rs. The Homeowner Association, the property owners as a whole, and individual property owners can enforce the CC&Rs. It is extremely important and essential that you review and agree to these restrictions prior to purchasing/closing escrow of the condominium. Some CC&Rs are very strict. You want to be sure that you can live comfortably with restrictions that may be imposed upon you.

Articles of Incorporation, Bylaws, Rules & Regulations “HOA Governing Documents”

In addition to CC&Rs, HOAs (homeowner associations) may be governed by Articles of Incorporation, Bylaws, Rules and Regulations and often architectural guidelines/standards. You need to read and understand these documents. You should also be aware that some HOAs impose fees that must be paid when the property is sold. Be sure to ask your Realtor® if the purchase of your property will result in any fees.

Financial Soundness of The Homeowner Association & Special Assessments

In addition to receiving the CC&Rs, and the HOA governing documents you want to receive a copy of the Homeowner Association’s financial documents. You need to know what is in their reserve for future or current maintenance that may be needed. Do they have enough money to cover possible roof replacement or repair issues, exterior painting, landscaping etc.  Some associations can fall short, especially in the past few years, of having a decent reserve to cover such items if they become necessary. You or you Realtor® should  inquire if there are any major maintenance/replacement items scheduled in near future which could result in an unforeseen special assessment.

Having a Realtor® that is experienced and knowledgeable about condominium ownership is a good place to start if you are thinking about purchasing a condominium. If you are just starting to look I would be happy to send you listings that fit your criteria or if you just have some general questions regarding this type of ownership contact me, I would be happy to be of assistance.

 

 

 

 

Written by Howard Harris