One of the biggest advantages of owning a condo or townhome is that typically the exterior structure, landscaping and grounds of the property are maintained for you. As a condo owner, you will pay a monthly homeowners association (HOA) fee, which usually will pay for the gardening, water, basic insurance on the property and exterior maintenance.
Every condo property is very different with regard to amenities, landscaping and services. Therefore, monthly HOA fees can differ greatly. As a general rule, a condo owner is responsible for the interior of their unit and the HOA is responsible for the exterior.
If you are considering buying a condo or townhome, there are many important factors to check on during your inspection or due diligence period. Below is a list of some of these items:
Homeowners Association reserves: You want to find out what the financial reserves are for the Homeowners Association. A well-run HOA will have a good balance of reserve money. This money is set aside for something, which is needed above and beyond the normal month-to-month maintenance, such as a repair or a new roof.
Upcoming assessments: You also want to find out if there are any upcoming special assessments on the property. Typically when the HOA reserve account is low, and there is not enough money in it to make a needed repair, the HOA has to assess each owner of the condo to pay for the repair. If there is a known upcoming special assessment on a property that you are buying, I would recommend that you negotiate with the seller for them to pay for the special assessment at the close of escrow.
Pending litigation: It is very important to find out if there is any pending litigation associated with the HOA or the property. Sometimes there could be a dispute between the HOA, the developers or the owners. Some of the nicest properties in some of the most desirable locations have current litigation on them. This is something prospective buyers should know about, before they move forward with a purchase of a property.
Conditions and restrictions: All condominiums have conditions and restrictions that you need to review before you buy. These conditions and restrictions are commonly referred to and known as CC&Rs. The most common restrictions buyers are interested in are related to pets, whether barbecues are allowed and the hours for pools, spas and gyms. Usually the CC&Rs consist of dozens of pages of intricate guidelines. It is always good to review the CC&Rs during your escrow’s inspection period.
HOA meeting minutes: It is a good idea to take the time to read the previous HOA meeting minutes. This will give you excellent insight into the recent events relating to the property and will inform you of potential issues that may not have come to your attention during the normal course of the escrow.
Parking spaces: Even though the listing of a property will typically state the number of parking spaces that are formally assigned to a unit that is for sale, it is very important that you confirm with the HOA the number of parking spaces that are actually assigned to the unit and specifically where they are located. This way, there will be no misunderstanding, with regard to your parking spaces, after the close of escrow.
Anytime you buy a condo, townhome or any kind of property, it is essential that you do a home inspection with a professional home inspector. The nicest and most pristine properties will inevitably have items that are in need of repair. Many repairs are not noticeable or able to be easily discovered, unless you are knowledgeable in the field of home inspections.
In addition to a professional home inspection, you should confirm and investigate all information relating to the property that is in question or of interest to you. Examples include, but are not limited to, square footage, permits, schools, public transportation, shopping, age of the home, whether the home has central air and heat, condition of the property and crime statistics.
Condos and townhomes offer homeowners the luxury of not having to maintain the exterior of their property themselves. This is a perfect situation for those who do not want that responsibility. By following the simple steps above, you can be well informed and potentially eliminate the oversight of very important information relating to your new home!
Trent St. Louis is a licensed Real Estate Agent and a member of the National, California and San Diego Association of Realtors. He can be reached at trent@tns.net or at his office in Hillcrest, The Metropolitan Group. DRE#01273643.
