Purchasing a condo is both exciting and stressful. This is a big investment, but it’s also a joyous milestone for many.
Condominium units are generally more affordable than detached homes, which is why first-time homebuyers may gravitate towards them. But condos also provide some perks like closer proximity to office buildings and restaurants, building amenities, and security.
Since condos house many people in one building, owners are subject to more rules and regulations than other types of homes. Buyers will need to take this into consideration. It’s recommended that would-be buyers conduct thorough research and ask lots of questions before making a purchase. Talk to a real estate agent, lawyer, property manager (if applicable), and the board before you buy.
Where do the boundaries of my unit begin and end?
When inspecting the condo for sale, find out exactly where the boundaries for your unit lie. In some condos, the boundaries include just the interior areas. But in others, boundaries are extended to the exterior walls or even the pipes behind the drywall. This information matters because it gives you a better idea of the things you will be responsible for maintaining and fixing.
What are your legal rights and obligations under the condo’s laws?
As a prospective buyer, you can (and should) ask for a copy of the condo’s bylaws and other governing documents that will help you understand what is expected of owners, and what rights belong to them. If you have questions about any of the rules, seek answers from a current board member or a real estate attorney.
What do the condo fees cover?
In addition to getting information about how much your condo fees would cost each month, ask what those fees cover. This will help you determine whether you would be expected to pay extra for certain services or expenses.
What costs will be incurred before or during closing?
If you applied for a mortgage, you may have to have an appraisal done. Land transfer tax must be paid at closing, if applicable. There will probably be legal fees, warranty fees, inspection fees and more. An attorney should be able to provide a detailed list of costs so that you aren’t caught off guard.
Is there a healthy reserve fund?
Finances will make or break a condo community. You want to invest in a building that has enough funds to cover major repairs and renewal projects should they come up. Otherwise, the association may need to levy a special assessment, which is never a good thing. Find out what’s in the reserve fund, what that money has been used for in the past, and how often the fund is depleted.
Ask if there are any pending assessments or major repair projects that currently exceed what is available in the reserve fund. Verify that the association has obtained a study on the adequacy of the reserve fund. It takes a lot of work and money to maintain a condo, which is one reason why condo fees are necessary. Higher condo fees are never popular, but aren’t inherently bad either. They help to ensure the reserve fund has enough money available to cover major repairs. If, however, condo fees are high and the reserve fund is still low, you may want to look at buying a unit in another condo building.
What are the rules on renting?
It’s not uncommon for someone to buy a condo unit with the intention of using it as an investment property. Most condo buildings are okay with this, but it’s always a good idea to check in advance that there are no restrictions on renting out your unit. Some places require a minimum rental length of 6 months or a full year to prevent issues that may accompany very short-term rentals. If Airbnb is permitted, you could also ask if the building allows key lock boxes or if it has its own key control system. Knowing these details ahead of time will help you decide if it makes sense to purchase an investment property in a particular building.
Are dogs/cats/pets welcome?
Pet owners need to make sure there are no rules about pets that would prevent them from legally being in the condo. Some condos place restrictions on certain breeds, sizes or species. This information may be provided to you by the board or property manager. You can also find out more about pet rules by reviewing the condo’s declaration and rules.
Where is smoking permitted?
Similar to pets, smoking rules vary from condo to condo. A handful of buildings are 100% smoke-free, but many will require people who smoke to do so in their units or on their balconies. If you do not smoke, it is worth finding out if your neighbors are smokers. This may change your willingness to buy a particular unit.
Is parking available?
Parking can be a headache if there aren’t enough spots in the condo’s parking garage. If you plan to park a car on the premises, inquire about parking availability and how much it costs. Don’t forget to ask about visitor parking, too.
Can home-based businesses be operated from the condo building?
More of us will continue to work from home part-time, but there are some entrepreneurs who run their entire business from their home. If this is you, check to ensure running a home-based business is allowed. Depending on local and condo laws, certain business practices may be forbidden due to excessive noise. Such limitations may also prevent you from using your condo unit for quieter practices such as consultancy. Often, it’s because the building doesn’t want so many strangers coming in and out of the property.
Is more neighborhood development likely?
Perhaps one condo unit stands out from all the others you’ve toured because of its magnificent view. You can see the city skyline, or the waterfront from your living room. But before you invest, take note of what’s in front of and beside your unit. If there’s a big open lot, or a few small stores, then there’s always a chance that a new condo building will go up in the next few years. You can always ask your real estate agent to look into the ownership of adjacent, non-developed properties to help you make a more informed decision. City planning departments can also give you an idea of what building permits have been requested and accepted.
One way to avoid having your view obstructed is to look for a condo building near others that have already been built. Another is to choose a place that overlooks an area that cannot be built on, like a park or a body of water.
Is it possible to talk to someone who lives in the building?
Until you have moved into your new condo unit, you can’t know for sure what surprises your new home will bring. But, getting honest feedback from a potential neighbor is a great way to find out what it’s really like to live in the building. A current owner can tell you how well maintenance issues are handled, what the building’s financial health situation is like, whether other owners host loud parties often, and if there is a low or high turnover rate. Getting this sort of honest information can be invaluable.
Conclusion
Purchasing a condo is a big milestone. Take the time to ask good questions, and get the information you need to make an informed decision.