My wife and I are considering moving into a condo this spring. What are the key things I should consider so that I do not regret my decision?
This question is one that is asked quite often, yet many condo purchasers fail to take the advice. You must realize that condo living is different from living in a single-family residence. You are not King or Queen of your castle. Condominiums have many idiosyncrasies that you should not ignore. Don’t get me wrong, condo living can be a very enjoyable and rewarding experience. You will make new friends, make lifestyle choices with likeminded people and feel freer and hopefully safer. Once you have jumped the hurdle of asking yourself WHY? you want to move into a shared ownership building, here are the key items that I suggest you consider.
Governing documents – These include legislation, the Declaration, and the Bylaws. Each of these documents contain details that directly impact living in a condo environment. Being aware of these parameters of a particular development may tilt your decision towards one location over another. Each condo corporation has some similarities and some differences. It is wise to shop around. Some buildings prohibit smoking even in your unit, there may be a ban on the number or size of pets that are allowed, and parking may be restricted to one vehicle. Because these documents are written by lawyers, they may be difficult to understand. It’s best to get legal counsel to review them with you.
What is the financial health of the corporation? You should review the last audited financial statement, the current budget, and also determine if the reserve fund is sufficient to cover upcoming expenses. A review of the most recent reserve fund study can be quite revealing.
Can you afford the monthly common element fees on top of a mortgage payment (If any)? Don’t forget that you will also be paying municipal taxes.
Demographics – What type of people live in the building? If you have a young family, a building whose residents are predominantly seniors may not be a good fit. If other residents are financially better off than you are, they may vote for improvements that you cannot afford, but will have to pay for or move.
Board Meeting Minutes – Ask to review board meeting minutes for the past year. These will provide an insight into how the place is managed. There may also be some indication of major projects being contemplated, or trouble brewing.
Try and have a chat with a few of the residents. Are they happy? What made them move in this particular complex? Ask them why YOU should move there.
There are more items to consider but these are, in my opinion, the key items. Finally, make sure that the real estate agent as well as your legal counsel are experienced in the condominium industry. Just because you will get a deal from your sister-in-law who is a realtor, or from your second cousin who is a lawyer does not mean they are fully conversant with condominium law. You might get what you pay for and give rise to a family feud in the process. Good Luck!
“Look before you leap.” – John Heywood, writer (c. 1497-1580)