You
have found the perfect condo and are ready to relax in its luxury. But you
need to stop right now. You need to do some research first, before you get
stuck with a
lemon. There are seven questions that
you must ask before you buy any condo.
1. What's the deal?
Look at the minutes of the condo
association board minutes to see what owners are complaining about. If
there are complaints about bad plumbing or lack of garden maintenance, you
know that there may be management problems. Even if you don't see any
complaints, reading the minutes will show you what projects are being
pursued at the complex.
2. Who is naughty and
nice?
You should find out the delinquency
rates of the present owners. If they haven't been paying their dues on
time, they may be unhappy with the community.
3. How much money is in the
repair fund?
Ask if the community has conducted a reserve-fund
review in the past five years. If the complex is 10 years old or less, the
reserve fund should have 10% of the cost of replaceable items in it. These
items include roads, roofs, tennis courts and swimming pools. If it is
between 10-20 years old, the repair fund should contain 25%
to
30%. At 20 years, the amount of funds should be 50% of more. Residents who
brag that the maintenance fees are really low, may be indicating to you
that the complex is living beyond its means.
4. How's your
insurance?
The one thing you should look at is
a copy of the certificate of insurance, which will summarize the
association's policy. Make sure that the replacement costs covered by the
policy are accurate estimates. Then make sure that the policy has a
building-ordinance clause, which means the insurer will bring the building
up to code if it has to be rebuilt. Older buildings usually require code
upgrades. You have to know what the association policy covers and what you
are responsible for. It would be smart to insure your own personal
belongings and other items that are not covered by the association's
policy. If you don't understand the policy, go to an insurance agent you
trust for interpretation.
5. Does the association have
any legal troubles?
When buying a condo, there are a lot
of little details to take care of. You should contact a local real estate
lawyer and have him or her go over the bylaws of the association. You
should have your lawyer look into the association at the courthouse to see
if any owners have sued it.
6. Is the complex friendly
towards renters?
If over 10% of the residents are renters, there
should be clear rental policies as a part of the bylaws. Ask to see the
association's rental lease, and have your lawyer look it over. You must
keep in mind that an association can change its
bylaws to
prohibit or restrict renting at any time. The more owners who rent out,
the less a chance this will happen.
7. Am I a keeper of the
community?
You need to watch out for condos
that are managed by the owners. While this can work, it can also lead to
more hassles for owners. If the complex is professionally managed, check
out the company as thoroughly you look at the association. Ask other
owners how they feel. Ask the surrounding community. Make sure you
interview the manager. If you end up with a bad manager, you will regret
it.
