Condo-purchase deal-breakers

Condos are a popular choice for first-time buyers as well as homeowners who want to downsize because they tend to be less expensive than single-family residences. Also, they usually require less maintenance.

Condominium owners belong to a homeowners association (HOA) that collects dues, usually on a monthly basis, to pay the cost of common-area liability insurance and maintenance, as well as to fund a reserve account. HOA dues often pay for more -- sometimes exterior painting, garbage collection and roof repairs. Precisely what is covered by HOA dues varies from one condo complex to another.

Before buying a condominium, make sure you read and understand all of the documentation, such as the covenants, conditions and restrictions (CC&Rs). The CC&Rs could include restrictions on your use of the property that would affect your decision to buy, like no large dogs or prohibitions against renting.

You should also review the bylaws, the homeowners association budget, a delineation of what is covered by the homeowner dues, a current financial statement for the complex and minutes from association board member meetings. If you have any questions about the association documents, contact one of the officers on the board of directors, or ask your real estate agent or attorney.

HOUSE HUNTING TIP: Minutes from the meetings are a great source of information about issues that are bothersome for current owners. For example, many condo associations have had to sue the original developer over construction defects. The minutes would be likely to reference such a concern.

Find out if there are any outstanding lawsuits. If there is an unresolved lawsuit against the developer, you may want to pass on this complex -- or at least have some level of certainty that the problems will be resolved at no expense to you.

Make sure to check on how often homeowners' dues have been increased in the past and by how much. It's also important to know how much money is in the association reserve fund. This fund is used to take care of repairs other than those that are routinely covered in the HOA dues. ...CONTINUED

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