Five Critical Questions to Ask When Buying a Condo

Depending on the market, condominiums (or "condos") are usually priced lower than a single family home. One reason for this is that you are essentially buying the inside of the unit, whereas everything external (even your front door in some cases) will be handled by the association. The more informed you are about the Association and it's processes from the beginning, the easier your real estate transaction (and your life) will be!

Here are some great questions to ask during the buying process with a condo. Ideally your realtor will ask all of these questions, but if they don't, definitely make sure you check off at least numbers 1-3 before you buy.

1. How funded is the reserve?
Every month, you will pay dues to the association. The purpose of the dues is to keep the building clean and functioning properly, including everything from cleaning the pool to keeping the lights on to mowing the lawn, in addition to making a small deposit into the reserve, or bank account for the building. The reserve is used for major expenses like landscaping projects, to renovate the elevator, or to paint the building. It is preferable that your potential building's reserve be 100% funded, but most buildings have less because the funds are constantly going out for projects. If your potential building's reserve is funded at less than 50%, your bank may decide not to go forward with your loan.

2. When was the last time the HOA dues were raised? When is the board planning on raising the dues again?
Your monthly budget for housing expenses will include your mortgage, taxes, and insurance, and your homeowners' association dues will be separate. It is important for you to know the last time the dues were raised so that you can estimate how much your expenses will be going forward, and so you can avoid unpleasant surprises if, for instance, you buy in to the building when the dues are $350/ month and two months later they go up to $450.

3. When was the last assessment?
An "assessment" or "special assessment" occurs when expenses in the building exceed what can be handled by the reserve. If the water heater breaks or the building needs to be painted and there's not enough money in the reserve, the balance is divided among the homeowners according to how much of a "share" you own in the building (this share is reflected by your dues). One good thing to remember is that there is no limit on the amount when it comes to a special assessment, so it's important to get a clear picture of the financial health of the building before you assume the responsibility.

4. When can I join the HOA board?
Some HOA boards require homeowners to be in residence for one year before they can be elected to the homeowner's board. Joining the HOA board will not only provide you with a great education, but will allow you to participate in the management and decisions of your building. The HOA board is made up of homeowners who volunteer, so get in there and make your building a better place!

5. How long do I need to reside in my unit before I can rent it out? Are there any restrictions on renters?
You are probably planning on living in your home now, but if your circumstances should change, you'll just want to make sure you are free to rent your unit. Some buildings have a one-year residency requirement before homeowners are allowed to rent their units out. Some buildings only allow two pets per unit. The more you know, the better prepared you will be!

With a few simple questions, you can make your condo buying experience smooth and successful, and can enjoy your building and your neighborhood for years to come! Enjoy your new home!