Buying a high-rise condo or loft can be the entryway to a new and exciting lifestyle. However, one of the most common problems of condominium living is a dispute with the homeowners association, and unexpected increases in fees that can occur. You should look into a number of issues before making the decision to purchase your condominium. Here is a list of questions you should ask to determine how well the association is being run and how your expenses will be affected as a resident:
1 – What are the covenants, bylaws and restrictions of the association?
The condominium homeowners association should provide you with a current book of rules. Read these over carefully to ensure that you understand the restrictions on renting the unit, number of residents and other issues that could come into dispute. Ask the association if any changes in the rules are pending that could affect you.
2 – What percentage of the units is owner-occupied, and what percentage is tenant-occupied? The number of units that are occupied by owners, instead of being rented out, can have a significant effect on the marketability of your unit, when and if you wish to resell it.
3 – How much money does the association keep in reserve?
Associations that keep a sizeable “cushion” for unexpected expenses will not need to impose “special assessments” frequently. This foresight will help to keep your expenses lower.
4 – What does the association assessment cover, and what isn’t covered?
Find out exactly what the period assessments cover. Most assessments cover such services as trash collection, snow removal, pool maintenance and upkeep of public areas. However, some condominiums may cover additional services in their fees.
5 – Are the association assessments keeping pace with inflation?
Periodic fees can rise significantly in condominium associations that have not determined a reasonable budgeting process for the property. Ask how frequently fees have been raised and whether increases are expected in the near future.
6 – Over the past five years, have special assessments been mandated, and how much did each owner pay? – Frequent special assessments are a sign that the association is not planning realistically for possible expenses, and could be a sign that you could be responsible for additional payments in the near future.
7 – What is the rate of turnover in the building?
If the building changes residents more frequently than every 4 to 5 years, it could mean that there are problems that make it unpleasant to live there.
8 – Is there any litigation pending concerning the building or association?
Legal problems could mean additional assessments for residents in the future. Find out if any litigation is pending and the nature of the problem.
9 – Does the developer have a good reputation in the industry?
Some condominiums have been converted from other types of property. Find out if the developer has a good reputation for quality construction and reliability.
10 – Is the property handled by multiple associations?
Larger properties may be covered by multiple homeowners associations. This situation can lead to multiple assessments for various expenses.