Condo Buying Tips 2014
Here are some tips when buying a condo. Over the years these have changes and this article is tailored for some of the important ones in 2014
- Sellers Past Due Assessments: If you are purchasing an REO Condo Property from a Bank or other Entity that acquired the property out of foreclosure, be aware that you are liable for up to six months of past due assessments from the prior owner. Have your attorney fix this in attorney review by requesting that the current seller pay this liability.
- Special Assessments: The good news is that nearly every contract form in existence requires the seller to pay all current special assessments to ensure that you take the property clear of any liens or encumbrances. But what is to stop the housing association from slapping on a new special assessment the day after you close? Have you attorney fix this property by demanding Section 22.1 Documentation including a filled out disclosure listing any planned or expected special assessments for the next two years.
- Parking and Storage Spaces – Are they deeded, a limited common element or assigned:
- Deeded: The parking space deeded to the new owner and can be alienated at any time. Another way to say this is that you own the space with no restrictions and you can sell it at anytime. The upside is that your spot can be sold as a separate asset or retained after you sell the main living unit to used as rental. The downside for the homeowners association is that groups can form buying up all the spaces leaving lots of units dependent on only rental parking making the condo development harder to sell units and also making for a lot of absentee parking space owners. In general this is now disfavored and in very few condominium declarations
- Limited Common Element. This is where you are deeded a parking spot and/or storage space which always go with the unit but cannot be alienated (another word for sold) except when seller the living unit, parking space and storage space together. This is generally favored today as a way to keep housing associations stable with every unit having parking an generally reducing the likelihood of anyone one person or group from owning the majority of parking spaces.
- Assigned by the Board. This is a form of Limited Common Element where you own the right to a parking space and/or storage space but it is assigned by the housing association board and can change from time to time. This is also favored today and is especially useful in large housing associations.
- Rental Restrictions: These restriction are very important to nearly every condo owner. Today there is a trend away from allowing rentals. Better Quality Condominium By-Laws will include an exception for hardship allowing rentals when needing to move for work or otherwise but not being able to sell the unit – for a variety of reasons – including being underwater on a mortgage. Have your attorney review these provisions in the condo decs and bylaws during attorney review.
- Pet Restrictions: Be careful with these ironclad provisions from which there is almost no mercy and discretion by the board. If your dog is one pound heavier than allowed, he or she is on their way to a new home. If pets aren't allowed, don't try sneaking in a cat – they will be found out and removed. This a heartbreaking area that should be discussed even before making an offer. Any good seller discloses this restriction but it is your realtor who can be your early advocate to learn about this when not listed in the listing.
- Small Homeowners Associations: These are associations 12 units and smaller. If the association has a management company, generally these are the same experience as living in a large association. However, small associations are much more sensitive to lawsuits and homeowners who are delinquent on assessments. Have your attorney check into whether the association is professionally managed, has delinquent assessments or properties in foreclosure.