Buying a Condominium
©2018, Melissa C. Marsh.
By: Melissa C. Marsh
Introduction To Buying A Condominium
A condominium is a common, or shared, interest in real estate. You
own the title ("fee simple") merely to the "air space" the unit
occupies. In the case of a townhouse, by contrast, you also own the land on
which the unit sits and the air space above (up to about 500 feet).
Both the condo and the townhouse share common spaces such as: walkways,
landscaping, parking, recreational facilities (pool, gym, spa) etc..,
which are shared by all of the owners in the development.
Common Problems Encountered When Buying A Condominium
There are two common problems faced by condominium owners. The
first is the increased risk that individual homeowners will bring a lawsuit
against the homeowners' association. The second is the delay that often
occurs when repairs and maintenance are needed, which often causes the
property value to deteriorate.
Before You Buy
Before you buy a condominium inquire about the following:
- Does the condominium development have covenants, conditions and
restrictions, and if so, are they adequate? Conditions and restrictions
such as minimum square footage, voting rights, size of the board, basic
rules for the use of common areas.
- Is the development separately incorporated? If not, you could be
headed for headache.
- Are any lawsuits pending against the homeowners' association? If
so, find out what the dispute is about, and have a lawyer evaluate the
claim, to ensure your pocket-book won't be affected by the outcome.
- Are there are rules regarding construction?
- Does the association have adequate reserves to handle maintenance
and emergency repairs? Check the financial statements, because a low
bank balance could lead to an increase in association dues or a larger
- How old is the building and when was the last time a major overhaul
was completed (e.g. new roof, plumbing, stucco/wood replacement, painting, etc...)
- Does the homeowners' association maintain fire, earthquake,
hurricane and/or tornado insurance? If you live in California, the failure of the Board to maintain adequate earthquake insurance can lead to the entire structure becoming bank owned.
- How many people own, rather than rent? If more than 25% of the
units are rented, you could have problems with noise, maintenance, and
future resale value.
When buying a condo you should not need the assistance of an
attorney, however it is important that you understand all of the documents,
including the bylaws and the condominium rules, conditions and
restrictions. If you are unsure about something, do not rely on the statements
of the broker or agent; getting an opinion from an attorney could be
money well spent.