Before you buy, contact the condo board with the following questions. In the process, you’ll learn how responsive – and organized – its members are.
- What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
- What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.
- How much does the association keep in reserve? How is that money being invested?
- Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.
- What does and doesn’t the assessment cover-common area maintenance, recreational facilities, trash collection, snow removal?
- What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.
- How much turnover occurs in the building?
- Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.
- If it is a new development, is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions.