There are many advantages to buying a condo, including: security, amenities, views, social community and included maintenance. However, there are also some potential negatives to consider before deciding to buy a condo. Some of the matters on which to focus as you consider a condo are discussed below.
Ownership Interest – Instead of owning the building and the land as one would in a single family home, the ownership interest is the space inside the condo and an undivided interest in the building and common areas. As a result, the condo owners will share substantial costs to maintain and insure the building and common areas, and others will have a say in the operation of your home outside your owned space.
Condo Owners Association – Similar to a homeowner’s association, the condo association will be responsible for enforcement of bylaws and collection of fees. However, because of the greater importance of a common building, maintenance, and amenities; the Condo Owners Association will likely have more “intrusive” rules and significantly higher fees. One will want to ensure the bylaws are in line with their expectations of the level of Association control. In addition, one will want to review minutes to ensure there are no issues, and the board functions in a professional manner.
Maintenance and Common Area Fees – As compared to a single family home, a condo will have significant fees for the maintenance of the building, common areas, security and amenities. When buying a condo, a consideration of the fees will be significantly impact the total price one is willing to pay for the condo.
Social Aspects – One of the advantages or disadvantages of living in a condo, depending on one’s perspective, is the social aspects of the building. Are there many organized activities? Do the activities reflect your lifestyle? Do the common areas support interaction?
Insurance – The Condo Owners Association will have insurance on the building and common areas. The unit owners will need insurance on their space, including furnishings and liability. Ensuring the Association and you have proper insurance will be important to you and your bank as you obtain financing.
Financing – Historically, banks have had greater losses financing condos than single family homes. As a result, financing rates are generally slightly higher than for single family homes and required down payments are generally higher. Most financing for condos will require 50% of the condos be owner occupied, monthly dues for nearly all units to be up to date, and other ownership requirements. In addition, the bank will insist on certain requirements for the Association such as: appropriate insurance, adequate budget reserves and no pending litigation.
Miscellaneous Considerations – With respect to parking, one will want to consider security and walking distance. For overall security, is the level of security and cost appropriate for your needs? In a condo, space is at a premium. So, is there adequate storage for your needs?
Living in a condo provides many benefits one may not have in other living arrangements. However, one will want to be sensitive to the associated issues.