If you’ve told people that you’re planning on buying a condominium they’ve probably told you about the horror stories – underfunded reserve funds, special assessments, unplanned major repair projects, crooked boards or managers, and aggressive condo lawyers (no way!?). With all the negative attention given to condominiums it might seem like a terrible idea, but a well-managed condominium can be a great place to live, work, or invest.
Here are some of my tips for buying a condominium:
- Work with a real estate agent who knows condos. He or she can steer you toward the condominiums that best suit your lifestyle. For instance, do you want one with plenty of amenities (and usually higher fees) or just the basics? Do you want one full of investors, or mostly owner-occupied units?
- Watch the numbers! Don’t forget to consider the monthly fees when you are determining your budget as they could be as much as an extra mortgage payment each month!
- Look at the condominium’s property manager. Do they work for condominiums? Are they involved in CCI? What about ACMO? Are they licensed? The right manager can make all the difference.
- You can also ask the other occupants or search the internet for posts about the condominium from the occupants. Make sure you take it with a grain of salt.
Offer Stage (New Condo)
- Work with a lawyer who knows condos. You wouldn’t go to a dentist if your foot hurt. Pick a lawyer who specializes in the area.
- Have your lawyer review the disclosure statement as soon as possible after you receive it. You only have 10 days from the date that you receive it or a copy of the signed agreement of purchase and sale, whichever date is later, to rescind the agreement without penalty.
- Some of the items to look for in the documents include:
- clauses releasing rights to sue the developer for construction defects;
- clauses requiring the condominium to purchase assets, property or services from the developer after the first year;
- restrictions that make your intended use of the property unworkable; and
- scrutinize the first year budget to see if it is realistic (it is common to see a 30-40% increase in the second year. Make sure you can afford such a sharp increase).
Offer Stage (Existing Condo)
- Add a condition in the offer that gives your lawyer time to review the status certificate. The condominium can take up to 10 days to provide one so it should be at least 12 days, or better yet have up to 10 days to receive the certificate and another 5 days after to review it.
- Review the status certificate to see if there are any issues with the unit, such as arrears of monthly fees, or the condominium, such as ongoing legal actions involving the condominium. You can also request more records if there is an issue that warrants further investigation.
- Review the condominium’s documents to make sure that your intended use of the property will be permitted. For instance, can you bring your family pet? Can you rent the unit to students? How many parking spots do you need? The audited financial statements and budget can help you determine what costs are included in the monthly fees and which ones will be your responsibility.
- A home inspection is a great idea too even if the condominium maintains most of the unit.
- Review the documents to familiarize yourself with anything that might be relevant to moving in. Is there a moving in/out procedure (i.e. booking elevators) that you need to be familiar with? Do you need to get keyless remotes or fobs to access the building? Can you change the keys without board approval?
- If you plan on renovating before you move into the unit you may need approval of the board before you can start.
- Arrange for condominium owners insurance, which is different than homeowners insurance. Ask about special assessment and deductible coverage.
- Arrange for the payment of monthly fees to start after the closing date.
- Your lawyer should notify the condominium that you now own the unit. The letter should include the names of the new owners, any occupants of the unit, their addresses for service, and any other information required by the condominium’s documents.
- Get involved and participate. Review the notices sent out by the condominium. Attend owners’ meetings. Ask questions.
The above list is by no means exhaustive, but it should assist you with your purchase of a condominium unit. For more assistance I recommend the following: