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.

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

For instance, after the Loma Prieta earthquake, the Watergate condo development in Emeryville, Calif., suffered damage to areas including the tennis courts, large windows and sliding glass doors. There was not enough money in the reserve fund to repair the damage. Plus, the complex didn’t have earthquake insurance coverage. The individual homeowners ended up paying an additional assessment to cover the cost.

Recently, it has become been more difficult for buyers to obtain financing to purchase condominiums. Your mortgage application could be turned down if less than 51 percent of the units are owner-occupied. Some lenders won’t lend unless at least 70 percent of the units have already been sold or are currently under contract to people buying a principal residence or second home.

You could be denied a loan if one investor owns more than 10 percent of the units. Also, the condo association insurance policy will need to be approved by the lender, as will the CC&Rs and perhaps other condo documentation. Check these financing issues out before you get into contract or you could find yourself waiting a long time for loan approval and end up searching for a new place to buy.

Be aware that even though the homeowners association carries insurance, you may need additional insurance to cover your individual unit.

It’s a good idea to have a home inspector inspect a condo that you’re considering buying. Before making a final decision, talk to some current homeowners to find out if there are any problems you should be aware of, such as poor sound insulation or low water pressure.

THE CLOSING: Ask the residents you talk to what they like and don’t like about the complex.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer’s Guide."

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