People who want to make the switch from renting to owning often choose a condominium as their first “real home.” Other buyers purchase a condo as a part-time holiday retreat or are attracted by a lifestyle that has fewer responsibilities.

What’s a condo?

A condominium is not the same as an apartment, although condo developments may include apartment-style complexes, townhouses or converted multi-family dwellings. It is different from other multi-tenant buildings in that the developer has legally declared it to be a condominium and units in the building or complex are purchased rather than rented. In most states, this means that the development falls under specially designated laws and regulations applied to condominiums.

Shared spaces

A condo owner buys title to his or her individual unit, up to the walls, but not including them. There are also common areas of the development, such as hallways and stairwells, dividing and outer walls, pools, fitness centers, rooftop gardens and barbecue areas. These are under shared ownership and every unit owner holds an interest in these spaces. Every condo development has a unit-owners’ association that manages the maintenance and repair of these shared areas. The association is elected by the condo owners and makes decisions in the interest of the community.

Fees and associations

The condo or homeowners association budgets and determines the fees for all units, usually based on the size of each unit, the number of units occupied and the projected expenses for maintenance and repair.

Condo costs

• Down payment, mortgage and property tax.
• Maintenance fees. Every condo owner pays fees to help maintain the building, pay the salaries of concierges, handymen or groundskeepers, and provide facilities such as a pool, gym or gardens. The fees are paid monthly and are subject to change.
• Special assessments. These fees may be needed when an unexpected repair or planned modification exceeds the cost of the condo fees collected.

Questions to ask

• What do unit owners think of their condo association? Ask owners for comments or complaints about the association’s activities and reputation.
• Does the condo association maintain a reserve fund to pay for unexpected and possibly expensive repairs? This will help you assess whether you can expect special assessment fees.
• Are there any pending legal actions between owners and developers or the association? Legal disputes can be costly.
• Are there any plans to add to the facilities, such as a swimming pool or gym? Such projects can mean a rise in fees. The minutes of condo association meetings should reveal any such plans.
• Is the development in good repair? Are repairs and maintenance handled in a timely manner? Before buying any condo, have the particular unit and the entire structure inspected to identify potential problems.

The rules

Condominiums are governed by a set of rules called Covenants, Conditions and Restrictions (CC&Rs), which are enforced by the condo association. Anyone who is thinking of purchasing a condo should carefully consider the rules, which vary from one development to another. The CC&Rs may impose restrictions on noise levels, renovation projects, pet ownership and renting.

A condominium can be a great purchase under the right circumstances, but potential buyers should be comfortable living within certain rules and restrictions and in close proximity to others.

 

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