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Condominium
Buying Guide
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Friendly Version)
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:
- are hesitant
about disclosing a lot of personal financial
information
- have a lifestyle
that will not change, thus needing larger
accommodations
- do not have time
to mow the grass or shovel the walk
- do not mind some
rules that may limit your decorating choices
- do not mind
paying extra for services that you may not use
- have a busy
lifestyle
- travel a lot on
business
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 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,
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.
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