Questions to Consider When Buying a Condo

Buying a condo comes with it’s own set of questions. With a single family home, you are responsible for the entire property. You can choose what you do to a home, and when you will do it (barring the city getting involved, of course). But when buying a condo, it’s important to ask certain questions, to understand the health of not just your unit, but the entire building. It’s also important to get a sense, as much as you can, of how maintenance, repairs and issues are dealt with.

What Kind of Building is Right for You?

You'll also want to think about whether a large building or a small building is right for you.

In a small building, ownership tends to be more 'hands on'. If there are less than 6 units, an HOA meeting will generally consist of sitting around in someone's living room talking about what to do with the tree in the backyard or who would like to be responsible for getting a bid for painting. Some people love that they get to know their neighbors and that there is a closeness that comes with being part of a small building. Also keep in mind that many smaller buildings are turn of the century so you'll want to consider noise and maintenance. In these buildings, HOA dues are *usually* lower with some buildings choosing to 'pay as they go' and just split larger expenses when they come up.

In a larger building, life tends to be pretty low maintenance. Many larger buildings have property management companies and while you can attend HOA meetings you also don't have to. HOA dues tend to be higher but most larger buildings will have a healthy reserve to take care of anything that comes up. Having healthy reserves is especially important in a larger building where costs to repair, say, a roof are much higher. If you are into amenities, these are the buildings you will find them in. Amenities range from common courtyards all the way up to resort style living, each with it's attendant cost.

Important Questions to ask:

  • What are the restrictions? Some common restrictions include number (and kind) of pets, restrictions on renting your condo out, and guidelines for making changes to your unit. This section of the CC and R’s (Covenants, Conditions and Restrictions) will spell out a lot of answers to questions about day to day living.

  • Is there any litigation in the building? Most lenders will not loan on a building in litigation, and those that will usually charge more points/have a higher rate.

  • Are there any special assessments coming up in the future? A special assessment is usually a large project that requires more money than an HOA has in it’s reserves. When this happens, generally the units will split the cost between them.

  • Read the minutes: the minutes of HOA meetings will tell you a lot about how an HOA is run. Do people tend to lean towards keeping the building in good shape? Do they want to table issues rather than deal with them? Do people work towards consensus? (P.S.: this is the juicy part).

  • Does any one owner own more than one unit *or* 10% of a project with more than 20 units? Banks frequently will require exceptions for lending in this situation.

  • Are more than 15% of the HOA dues delinquent?

  • Was the building recently condo converted?

  • What is the percentage of owner occupancy in the building? Frequently, a lender will require that at least 50% of a building be owner occupied, sometimes more, depending on the loan. Always a good idea to let the lender do a bit of research on a building you are putting an offer on.

  • Is the project a live/work, with any deed restrictions?

  • Is the HOA more hands on or off? In a smaller building, it’s mostly the owners sitting in someone’s unit, making decisions together. In a larger HOA, there is often private property management handling most of the details. Generally, you can be involved in meetings, or not. Which better suits your preferences and lifestyle?