Before you purchase a condo, you should have an attorney review property documents for you. However, you should also contact the condo board ahead of time. You’ll be alerted to potential problems and learn how responsive and organized its members are.
How many units are owner-occupied?
Generally, the higher the percentage of owner-occupied units, the easier the condo will be to resell. Conversely, the lower the percentage of owner occupied units, the harder it will be to resell. Therefore, you can use this as a gauge before you make your purchase.
What covenants, bylaws, and restrictions govern the property?
First, carefully read the bylaws to determine if you can abide by them. Also, find out if there are grandfather provisions that allow current owners more rights than you would have as a new owner, such as the ability to rent out your unit.
How much does the association keep in reserve?
The key is to find out how the money is being invested.
Are association assessments keeping pace with the annual rate of inflation?
Smart boards raise assessments a reasonable percentage each year to build reserves for funding future repairs.
What does the assessment cover?
Find out about common-area maintenance. In addition to that, ask about recreational facilities, trash collection, and snow removal (if applicable).
What special assessments have been mandated in the past five years, and how much of that was the responsibility of individual owners?
Some special assessments are unavoidable. However, repeated, expensive assessments could be a red flag about building conditions or fiscal policy.
What’s the turnover rate?
The answer to this question will tell you if residents are generally happy with the building.
Is the condo building in litigation?
Obviously, this is never a good sign. If the builders or owners are involved in a lawsuit, reserves can be depleted quickly to pay legal fees.
What other projects has the developer built?
Try to visit one, and ask residents about their perceptions. Also, request an engineer’s report if the building has been converted from another use.
Are multiple associations involved in the property?
In very large developments, umbrella associations also may require separate assessments.