As the real estate market changes dramatically, condos pique the attention of first time buyers who fear or who have no time for home maintenance. The prices are realistic, locations are often extremely convenient to work, shopping and recreation.
Condo life can be wonderful. It can be a nightmare. Do your homework.
An attorney once said, “Condo Boards are magnets for middle management executives who never achieved the status they think they deserve.” The result finds you living in a mini Gestapo.
The CC R;’s and By Laws, often referred to as ‘The Documents’ are the legal papers that guide the operation; outline the rules and administration; describe what you are responsible for and what the ‘Association’ or ‘Board’ is responsible for.
Not all condos are the same. Many are configured like apartment buildings. Others are more like individual attached homes. The difference in construction or configuration has an impact on how the monthly fees are assessed.
Often monthly dues are based on equal payments by the residents. Others are based on the square footage of the individual units.
The argument for equal payments is that the exterior common area benefits each owner equally. An example is that a 3-bedroom residence pays the same as a one bedroom. This seems to make sense in an apartment building setting.
Dues based on square footage pertain to the interior square footage. The owner is responsible for the interior and the Association is responsible for the exterior. So, this requires careful consideration depending on the configuration of the complex and the location within the complex of the individual unit.
For Example: An interior unit, one surrounded on the top, bottom and three sides by other units, has less exterior walls, roof etc., which the Association maintains. However another unit with the same interior square footage my be an end unit with exterior decks, resulting in considerably more area the Association maintains.
Dues are issues to be carefully analyzed.
Over all, it is important to make sure the ‘Documents’ have certain protections for buyers/owners.
- Mandatory Non-Binding Arbitration is critical. Without this clause, an owner at odds with the Association or the Board has only one opportunity to have their case heard. Hire an attorney for several hundred dollars an hour. The more desirable alternative of Non-Binding Arbitration ensures your issue can be heard and resolved inexpensively and timely. If one party or the other is not pleased, they still have the option to bring litigation.
- Board Directors may not be elected by PROXY. Owners are required to vote in person or by written ballot.
- Directors or family members may not vote PROXIES.
- Maintenance request must be responded to within 3 days and resolved within 30 days. The timing may be different but it must be specified that the Association will in fact perform requested maintenance in a timely manner.
- Note the number of full time residents. A complex with more than 50% of the residents part-timers or seasonal occupants indicates less interest in the quality of the project maintenance.
- Take the time to be aware of the maintenance of the building and grounds. Speak up, give written suggestions. Keep a notebook that contains copies of the documents, all notices, meetings and correspondence pertaining to the complex.
- Ask the seller to provide you with copies of the prior 2 years financial statements and meeting minutes. If there is a history of ‘Special Assessments’, beware. This is generally a sign of poor management.
If all this seems intimidating, consult an attorney who specializes in Condo Law. In smaller cities you may find only attorneys who specialize in real estate. Lastly, consider sitting on the Board.