Entering into a real estate transaction can be a rather intimidating proposition for anyone who is doing it for the first time. But even those who have owned, bought, and sold homes many times and are seasoned veterans when it comes to real estate can be baffled or uneducated when it comes to the purchase of their first condo. That’s because condominium ownership is different from ordinary home ownership in ways that are significant and can affect your rights as an owner, as well as the resell value and long term outlook for your condo development or building.
The major difference between condo ownership and that of conventional single family homes is that, unlike ordinary home ownership, you share part of the condo community with the other residents, and each of you has a portion of the ownership rights over those shared areas or assets. You might, for example, have full ownership of your two-bedroom condo, but you only own a percentage of the roof above it and the plumbing system that services it, because these items are also owned in part by other homeowners in your condo complex.
What becomes particularly important is that partial ownership conveys only partial rights and control. If you don’t own the landscaping outright — but instead share its ownership with other residents — then you don’t have to assume full responsibility for taking care of cutting the grass and trimming the hedges. The responsibility is shared. At the same time, you don’t have the right to go and put in a cactus garden or cut down a tree without getting permission from a majority of the other owners, because the landscape doesn’t belong to you, it belongs to everyone who shares in the condo community.
Because of shared ownership, any inspectors you hire prior to purchase should check your unit but also give you a written report on the condition of assets that are outside of your unit. These include any shared amenities or mechanical components like the building’s heating, plumbing, and electrical system, roof, foundation, parking lot or basement.
The rules and regulations that govern such things as landscape maintenance, painting the outside of the building, sharing the swimming pool and whether or not you can rent out your condo are all covered by covenants or condominium association bylaws. Before you buy, you should review all of these with a real estate attorney, to ensure that you know exactly what your rights and responsibilities entail.
For instance, you may want to buy a condo so that you can use it as a vacation rental for extra income. But the other residents may have already voted to make their condo development an owners-only project, with no rental units. Or you may have monthly condo maintenance fees of $150 to cover things like repairs, but the city requires that your building upgrade its sprinkler system and fire escapes, and those renovations will cost $150,000. In order to pay for everything, the individual owners need to divide the costs or take them from reserves. But if your condo association is well managed and professionally organized, it may have a large reserve fund for such capital expenditures. If that is the case, then you’ll get the benefit of those assets that have been set aside over the years to take care of unexpected expenses.
In other words, by buying into a good condo community you can automatically inherit some extremely valuable perks or assets. In fact, the covenants and management of a condo association may be the best selling feature because they add value to the quality of life for each owner. There might be rules against changing the valuable historical architectural features of the building you’re in, or the maintenance fees might entitle you to have full access to an exclusive clubhouse and golf course. The point is that condo ownership is governed in part by regulations that should be understood before you sign on the dotted line, to avoid any unexpected surprises.
Assessments or maintenance fees are usually mandatory and collected monthly, quarterly or annually. Failing to pay them could result in a lien being placed against your property. Find out what your fees cover and don’t cover, and then compare them to the fees for similar condo associations in the vicinity. Then talk to current owners to find out how satisfied they are with their condo management and quality of life at the particular project.
A condo can be a dream come true, because it allows you to eliminate all the routine headaches normally associated with home ownership. At the same time, it can allow you to enjoy luxurious or unique amenities you could not afford if you were to buy a conventional, traditional single family house.
For expert help with condo buying and selling, contact www.GayRealEstate.com and www.GayMortgageLoans.com, or call toll free 1-888-420-MOVE (6683).