10 Questions to Ask the Condo Board

Here are the questions you should ask before you buy. You or your agent might want to contact the condo board or management company.

Via NAR. (Click on document for larger image).

1. What percentage of units is owner-occupied? What percentage is tenant-occupied?
2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place?
3. How much does the association keep in reserve? How is that money being invested?
4. Are association assessments keeping pace with the annual rate of inflation?
5. What does and doesn't assessment cover -- common are maintenance (CAM), rec facilities, trash, snow removal?
6. What special assessments have been mandated in the past five years?
7. How much turnover occurs in the building?
8. Is the project in litigation? If the builders or homeowners are involved in a lawsuite, reserves can be depleted quickly.
9. Is the developer reputable?
10. Are multiple associations involved in the property?

You can actually find the answers to some of these questions in a condo document upon ratification of a sales contract. In a new construction or conversion, you have 10 days to review the document. However, on a resale of an existing house -- you only have 72 hours (or 3 days) to review the document. If for some reasons, you don't like what you see in the doc, you can void the contract before the 72 hours lapses. No question ask.

The number 1 question -- is very important to the lender. The ratio of owner occupied vs. tenant occupied will determined whether the lender can financed your purchase. The lower the ratio of owner occupied vs. tenant, the more marketable the property is. The lender will need the numbers from the management company.

Comments

[Landlord Shmandlord]

I recently purchased the condo in which I now live, but plan to rent out if/when I move in a few years.

According to the condo docs, in order to be allowed to rent out a unit, the unit owner needs to state that he or she is an investor at closing (there is also another process one can go through after closing). However, only 30% of the units are allowed to be owned by investors at any given point in time, so had I not stated this initially it's possible that in 10 years when I move the 30% would be filled and I would not be allowed to rent out this unit.

The other thing that caused my girlfriend some trouble is that any window coverings must be off-white. Apparently this "really restricted her choice of palette". However, that was not a showstopper.

I'd be curious what kind of ridiculous rules exist out there = )

[Dewita]

Unfortunately some of the buyers don't put enough time to read the condo docs. Buyers need to understand that once the cooling off period expires, they have practically a few way out.

[christian]

It is essential to comb over the condo documents. New projects reserve the right to make addendums, The Chase project in Bethesda (large part of the project cancelled) revised its documents to disclose large amounts of mold in the building it opted to abandon, a very importnat disclosure to potential buyers