5 Things You Need To Know BEFORE You Buy That Condo
Condos are the perfect choice for the buyer that doesn’t want to deal with the exterior maintenance that comes along with buying a single family home. Condos are great for first time home buyers just getting their feet wet in home ownership, people who want to downsize or those who work or travel a lot. Since shared living space also means sharing the cost of maintenance & improvement as well as delegating some major decisions to a third party you want to know that the building is managed effectively. Here are five crucial questions to ask to make sure you don’t get in over your head. Want to search a comprehensive list of condo buildings in Philadelphia? You can do that right here. Would you prefer to start your search with an agent? We would love to help! Contact Jordan Brody today.
1. are there any special assessments for capital improvements being discussed by the board?
A special assessment is a one time fee for capital improvements (like replacing the roof or updating the elevators) & are the responsibility of every owner in the building. If it is only in the discussion phase & not yet pending it may not be in the condo docs. This information should be disclosed to you. In order to protect yourself from non disclosure ask the seller for a copy of the condo meeting minutes to review from the past two years. Special assessments can cost individual owners thousands of dollars & could potentially hurt resale in the building.
2. are there any capital contributions or assessments due at closing?
A capital contribution & a capital improvement are different. A capital contribution is non refundable & goes into the buildings capital reserves. It could be a flat fee or it could be 2 or 3 months of what the monthly condo fee is. This money is held in the reserves & used for any maintenance or improvements that need to be done. If there is a PENDING special assessment that needs to be paid at closing you need to know who is responsible for this & if it’s the seller that they are aware & they are able to pay.
3. what exactly does your condo fee cover?
Condo fees vary from building to building; some cover everything & some cover very little. In order to budget properly, a buyer will want to know exactly what the fee covers.
4. is there any pending litigation?
Pending litigation against the association, developer or between unit owners can become costly for the association & result in a special assessment to cover legal fees. It can also prevent a buyer from obtaining financing which can hurt resale. This is something that was more than likely discussed at the meetings so ask for the minutes from the past two years for review. If litigation is already underway it will come up on title or in the condo docs which you (or your attorney) should review thoroughly.
5. investigate the associations finances
What is the annual budget? How much do they have in their capital reserves? If the capital reserves are low you could be looking at a poorly managed building or a special assessment being levied on unit owners in the future.
A few questions can help save you a lot of time, money & aggravation. Hire an experienced agent, ask the right questions & go with your gut if something seems off! Have a question for us? Submit it below or leave us a comment!