Once you have found the condo that you believe is perfect for your tastes and lifestyle, there are some questions that should be asked before any purchase is made. These key questions will prevent you from being stuck in a bad homeowner’s situation and will make you more prepared for what you are getting yourself into.
The first question that you should be asking is what the other owner’s complaints are. Remember that if you were to move in, there’s a good chance that these complaints could become your own. Reading the minutes of past association meetings will provide good insight as to what any problems are. Of course, the present owners may not have anything to complain about but reading the minutes is still a good idea. They may show that there are things in the works for the condo and these could be things that the seller hadn’t mentioned.
The next thing to find out is who is paying their association dues, or at least the percentage of people who aren’t. Owners neglecting to pay their bills could indicate that they are having problems with the condo and therefore, withholding fees, or it could be an indication of not having enough funds on the association’s part.
Another big question that you should have answered is how much money is available for repairs. Also ask if reserve fund has been reviewed in the past five years. If the building is one to ten years old, the fund should have ten percent of the cost of replaceable items. If the building is between ten and twenty years old, it should have twenty-five to thirty percent available in the repair fund. After twenty years, the amount should equal fifty percent or more. Be wary of condos that have owners who claim to be paying very little in maintenance fees. This could indicate that the building has poor upkeep or that the building is going above its means.
One of the most important questions that should be asked is to see a copy of the certificate of insurance. The replacement costs should be enough to cover the costs of rebuilding and the policy should contain a building-ordinance clause. This will ensure that there will be enough money to make sure the building meets code should rebuilding become necessary. Also make sure that you know what the association will cover and what is the responsibility of the homeowner. The homeowner should get insurance for any contents inside their own unit as well as anything that the association’s insurance does not cover. If you don’t understand all of the insurance language, take the policy to an agent to help you understand what it says.
Buying a condo is different from buying a single-family home in that there are many more complications and things to consider. A homebuyer should obtain a copy of the condo’s by-laws and look it over with a real estate lawyer to ensure that they understand them and that they are in keeping with any state laws. The lawyer can also screen the association at the courthouse to make sure that they have never had a suit filed against them.
A homebuyer should find out what the rental policies are. These should be listed in the by-laws or added as an amendment if the condo consists of ten percent or more rental use. Although the association can change the bylaws regarding renters, this is less likely to happen if there are a lot of owners renting.
Any homebuyer should be wary of condos that are managed by the owners themselves. This could lead to many problems, especially if the owners are not in the local area. If the complex has a management company working for them, they should be looked into as thoroughly as the association is. Asking the owners and people living nearby will give good insight as to what the management company is like. Also find the manager who runs day-to-day operations and speak with them directly.
Jeffrey G. Funk, P.A.
Realty Executives Central Florida
7932 West Sand Lake Road • Suite 302
Orlando, FL 32819