In today’s real estate market, homebuyers are being more and more informed and educating themselves before jumping in. This blog is to help you find the right condo for your needs, the right buyers agent and ask the right questions so that you are a satisfied condo owner for years to come. Here are some of the top questions to ask before buying a condominium.
#1. What are the association rules.
When purchasing a condominium or townhouse you will be part of the homeowners association or HOA. This association regulates all of the rules and bylaws for the condo owners and tenants. You need to make sure you understand the rules and agree with them before buying a home in the complex. If there’s something you don’t agree with or have questions on, be sure to ask a member of the Association ahead of time before signing on the dotted line. There are multiple rules and typically the conditions, covenants and restrictions also called CC&Rs, are multiple pages if not hundreds of pages of documents and rules. If there’s something specific that you’d like to ask about simply ask the Association directly. A lot of people hire a real estate attorney to go over the document for them making notes of any unusual or out of the ordinary items. You should receive a copy of these covenants and rules before finalizing your condo purchase.
Owning a condominium means that you won’t the inside of the property whereas everyone in the Association owns a part of the outside. You must abide by the rules. The Association could be managed by owners or an outside management company. Talk to other neighbors in the area about the Association and how they feel it is run and handled. If they are frustrated, you would probably be as well.
#2. How much are the association fees.
The Association is run and managed based on the fees associated with living in the condo complex. These association fees are based on how many homes there are and the cost to run the community. Most of these fees will include exterior maintenance of the building, landscaping, insurance, potential water and sewer services, road maintenance and trash pickup. There may be other items included in the association fees as well such as management and maintenance of amenities, like a swimming pool, hot tub, golf course or tennis courts. You want to ask what it covers and if they have reserves available in case of a major replacement or repair.
#3. How much is in the reserve fund?
All of these association fees get put into a reserve fund. This reserve fund should continue to add up until something major needs to be repaired or replaced. If the reserve fund only has a few thousand dollars in it and replacement of the entire complexes roof will be several hundred thousand dollars, guess who that special assessment fee is going to be put upon? Condo owners will need to pony up the money if there’s a large replacement or repair. It’s important to know how much is in the reserve fund to cover major replacements. As a general rule, this fund should contain about 10% of the annual revenue budget if the complex is under 10 years old. If it is older than 10 years, it should be closer to 25% for major expenses and repairs.
Don’t be attracted to low condo fees because this also means that they may not have much in reserves for a major expense. Ask about special assessment fees and what happens to condo owners should they need more money for repairs and maintenance than is currently in the reserve fund.
#4. Are there any lawsuits against the complex.
Many lenders will not even finance a condominium that is currently under a lean or a lawsuit. However, if there is a lawsuit you should ask about it because it could be something extremely trivial. If it is negligence on the associations responsibility such as not repairing steps and a condo owner has fallen, this is a major concern. If the Association is not going to maintain the property properly, you could be liable for issues in the future. If it’s something as simple as a condo owner suing the Association because they want 10 dogs instead of the limit of 2, that it’s probably not that big of deal.
#5. What is the rental policy?
A lot of people in Panama City Beach purchase condominiums in order to rent them out throughout the seasons. However, some condo associations only allow a certain percentage of units to be rented so you’ll need to know if they have maxed out that limit or if you don’t want to rent, you may not want to be in a complex that is 90% renters.
#6. What about parking?
You’ll need to double check on the parking before finalizing the sale. This can be an important consideration especially if you have people over for entertaining. Some complexes only allow one or two deeded parking spaces while others have free parking. This is important to note depending on your lifestyle.
#7. Who is responsible for what?
Make sure you understand what you are responsible for as a condo owner of the complex. There are several gray areas in condo developments so double check things like windows, fences, balconies and porches that could be common areas and yet they could be personal as well. You certainly don’t want lawsuits, negotiations or issues to come up when it comes to who fixes what.
For more information on condo associations, questions and purchasing a condo in Panama City Beach contact our office today.