June 18, 2015
If you are buying a condo you will become a member of an owners association. The owners association (or HOA) offers to protect the value of properties in the community through maintenance services, restrictive covenants and rules and more. The HOA is likely administered by a board of directors—volunteer homeowners elected by their fellow residents to set budgets and policy.
So, in addition to the typical inspection and investigation of the home and whether the home and community is right for you and your family. You should also investigate the community and the HOA.
Here’s what you should look at when buying a condo:
- Get copies of the covenants or declaration and other governing documents. Read and review those. If you don’t understand something, ask your agent or attorney.
- Is the community built out? Is it a conversion? Appearances can be misleading. Old buildings are old buildings. A snappy, refurbished lobby does not necessarily mean that the heating system, elevators and roof aren’t due for expensive overhauls.
- Is the board of the HOA under declarant control or has it transitioned to owner control?
- Find out the assessment of the HOA. What does the assessment cover? Ask for a copy of the budget.
- Is the HOA adequately funded and financially strong? Get and review financial statements for the HOA, minutes of board meetings and any financial audit. See if the HOA has a reserve study and plan for funding long term repair, replacement and improvement. Are adequate funds on deposit in a reserve account to cover projected costs in the reserve study? If the community is not setting aside adequate funds it could result in a special assessment to owners. This unexpected expense could cause a financial hardship to owners. Lack of adequate reserve funding can also impact your ability to get a loan and refinancing.
- Find out what the HOA maintains, and what you would be responsible to maintain.
- Review the restrictive covenants and rules? Are they right for you?
- Check insurance. Who insures the home and what insurance should you obtain?
- Take a walk. Are the common grounds well maintained? Are the homes well kept? Is there ample parking? Are the amenities—swimming pools, tennis courts and playgrounds, for example—well maintained?
- Ask to talk to a volunteer community leader—the president of the association, a member of the elected board or the professional who manages the community.
- Are there issues in the community?
- Consider talking to existing residents. Find out how they feel, not only about the neighborhood, but also about how the community is governed and managed.
- Ask lots of questions and you will be better prepared to make the decision on whether or not to purchase in that community!
Be Realistic
Once you have done all of the above and you’ve identified your ideal home, be realistic. Condominium living is not for everyone. There may be difficult issues – connected to the need to balance the rights and responsibilities of individual homeowners with those of the community as a whole. Judgments are subjective and subject to change. Decisions are not always met with unanimous approval. Mistakes are made. Human beings—residents and community leaders—may occasionally lose sight of what’s right, fair, and reasonable.
Also, some personalities are not suited for condo living. Some people bristle when faced with rules and regulations that must be enforced to maintain established community standards. Ask yourself if you’re likely to have severe buyer’s remorse the first time you run up against a rule you don’t like. If you’re not sure, think it over. Talk to people your agent, attorney, and those who live in the community before buying a condo.
