Condominiums and townhomes are a wonderful way to go, but they do have certain considerations, costs and obligations that their single-family brethren won’t have:
Whether your new Association is made up of only two unit owners or two thousand, these are your new business partners. You need to confirm that they been taking care of Association business in an orderly and professional manner, Are they keeping up with needed maintenance or have these been delayed necessitating a special assessment? The budgets and other available Association financial records along with their meeting minutes help address these concerns.
And it is important before you get too far into the purchase that you carefully review the Association governing documents. Does the Unit come with parking, storage and/or roof rights? How are those rights identified and titled? What are the remodeling rules? Are there any rental restrictions? Is the Building pet friendly? What is included with the regular Association fee? Most include water and some basic cable, but not all. Others include amenities such as a health club and swimming pool access. The Declaration, Bylaws and Building Rules should answer these questions.
Purchasing a condo will also add fees to a closing. Most Associations charge fees for gathering all the governing documents and for providing written proof that the Seller paid the assessments through closing. They may also have a move in fee and other administrative charges Years ago, these were nominal fees. Now the charges have grown significantly. Check with the Association or Your Lawyer for the details on the additional costs
Has the Association been approved by your lender for the type of loan that you that are applying for? Some Associations have too many foreclosures or insufficient reserves to get loan approval for even conventional loans. FHA and VA loans have even stricter requirements for Associations. This needs to be vetted with your lender before money has been unnecessarily spent on an Association that cannot get approved by the lender’s underwriters.
To be accepted into the Association, a few Associations require buyer interviews, credit checks and letter of recommendations, but most just want the buyers basic contact and billing information.
Check with the Association or Your Lawyer for specifics.