5 Mistakes to Avoid When Buying a Condo

Buying a condo means buying a lifestyle. You may not have a yard for pets or children to play in, and you’ll have Condo Association rules that you’ll be expected to follow. But, you won’t have to worry about shoveling snow, mowing the lawn, or replacing the roof. Condo living may not be for everyone, but it certainly has its benefits. If you're looking to buy a condo, here are five mistakes NOT to make.

What is a Condo?

A condo or condominium is a privately-owned unit within a complex of other units; it may be an apartment in a high-rise building, a townhouse, or even a detached, free-standing home. Condo owners share responsibility for common areas, which may include garages, elevators, pools, gyms, and open spaces. Condominium complexes have an association that oversees the complex's operations.

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Mistake 1: Not Researching the Condo Association

Condo Associations, like homeowner associations, have a Board of Trustees (Board.) The Condo Association Board may be comprised of elected residents for a specific term as defined in the bylaws or all unit owners if it is a small complex. The Board is responsible for overseeing ground maintenance, insurance, common utilities, financial transactions, and exterior building upkeep. Depending on the bylaws, a Board may:

  • set monthly maintenance fees for each unit,
  • require special assessments,
  • file legal actions,
  • determine how the common areas can be used, and
  • dictate the number and types of pets allowed.
  • Condo Boards are required to hold annual meetings. Additional meetings may be necessary to resolve disputes and to review financial status.

Disagreements happen in any community. In condo environments, the Board plays a part in conflict resolution. Violations can result in sanctions, fines, or even legal action. Failure to pay fines or fees may result in a lien placed against your unit. In some states, the association may have the right to foreclose for lack of payment of fees or fines.

Each association is different, it’s important to know how conflicts are resolved, and rule violations are handled. Consider researching how, or if, these rules can be amended.

Mistake 2: Not Knowing the Details of the Association Fees

Condominium fees typically consist of monthly association fees and special assessment fees.

What is included in the monthly association fees should be outlined in the condo association rules? Special assessment fees fund unexpected or long-term expenses and are defined at the time they are estimated.

Association Fees

The Homeowners Association fees cover the maintenance of common areas of a condominium complex. Below is a list of are examples of what could be included in these fees.

  • Trash Pickup
  • Landscaping
  • Snow Removal
  • Exterior Lighting
  • Pool Maintenance
  • Parking

Special Assessment Fees

Condo associations must have a documented method for funding unexpected or long-term expenses such as roof replacement or replacing a building-wide heating and cooling system. Most associations opt for one of the following methods:

  • Maintain a cash reserve to cover expenses
  • Use special assessments to cover expenses

Maintaining cash reserves means higher monthly maintenance fees. The size of the cash reserve depends on multiple factors, including the age and condition of the building and units.  Special assessments can run into thousands of dollars if major repairs such as roof replacements are necessary. By checking how cash reserves are funded and evaluating the possible need for upcoming repairs, buyers can estimate when special assessments might be levied.

Mistake 3: Not Researching the Condo Property Management Company

Many associations hire property management companies to help with the administrative tasks of operating an association. The property management companies often act as advisors in areas where the Board members lack expertise.

Property management companies arrange for maintenance, landscape services, and snow or leaf removal. They may also arrange annual meetings and participate in Board meetings. Typically, condo owners contact the property management staff when they have a problem or question.

For example, the front door of a unit needs to be replaced. The unit owner would contact the property management company regarding door replacement. A poor management company may take months to respond, leaving the owner with a damaged door.

Property managers are often responsible for collecting maintenance and assessment fees and issuing invoices or statements. Knowing the company has a solid reputation makes it less likely that fraudulent activity would occur.

Mistake 4: Not Assessing Restrictions and Amenities

Check the association's covenant and rules before buying a condo. Those are the little details that can make condo living unbearable. Below is a shortlist of the types of rules that many associations have enacted:

  • Stipulate the paint colors that are allowed to be used on the exterior of a unit.
  • Restrict the size or type of trees and shrubs planted.
  • Prohibit RVs from being parked in a driveway.
  • Limit the use, size, or type of fencing.
  • Prohibit subletting or renting the unit.
  • Prohibit pets, or dictate the size of the pet.

As with any property, be sure to check the surrounding area for amenities. Especially for condos, make sure you consider the number of allotted parking spaces you can expect (especially when you have guests).

Mistake 5: Not Working with a Lender with Condo Expertise

Working with a lender that understands how condominiums operate can save buyers time and money. Experienced lenders know how to review condo documents (Master Deed, Condominium Trust, and the by-laws) for financial stipulations that could add to your monthly expenses and possibly impact how much you may qualify for. A lender inexperienced with condominium financing may not identify critical elements that could impact your application being approved in a timely manner. This oversight could delay your closing or, worse, cancel your application altogether.

Buying Your Condo – Where to Start

The best place to start is with your mortgage lender at Middlesex Federal Savings, specializing in condo financing. Our expertise can help you collect and review the condominium documents, to ensure a smooth approval process and avoid unnecessary closing delays. A Middlesex Federal Savings condo mortgage specialist can guide you through the process of buying a condo and will be there to support you before, during, and after your loan closes.


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