Here a some tidbits on information you may find use before you decide to buy in a condo community.
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The Maintenance Fee, what does it pay for? Typically in most communities the maintenance fee covers: (Each complex is different as far as what is covered, but this is a general guide)
- Exterior maintenance, amenities, pool, guardhouse, gym, doorman etc.
- Snow removal & ground care
- Interior common area cleaning and maintenance
- Insurance of building, management fee.
- Capital improvement fund for roof, driveways walkway replacement.
- In an older garden apartment type and high rise building community the maintenance may sometimes cover the heat and hot water. But this should be verified.
Caveats: I would certainly verify the financial status of the complex, insure there is sufficient funds in the reserve account to cover expected failures such as roofs, driveway etc.
Getting Condo Docs: In order to move forward before any purchase you should be able to obtain the “condo docs” which included the rules and regulations, financial status and other important documents that you should read prior to formally going under contract. These docs can sometimes be obtained through the condo management company for a fee. Or if you decide to make an offer on a unit, your attorney can request the Public Offering Statement from the sellers.
Public Offering Statement: What is it? A Public Offering Statement (POS) is a document provided to buyers of a new condominium by the builder. The document contains details about how the condominium is structured and managed, including its CC&Rs. It also contains important disclosures about budgets, insurance, construction and rules for the condo.Click here opens in a new windowis an example of a POS.
Reserve Fund: Have you heard those stories about huge SPECIAL ASSESSMENTS? Capital Reserve funds are collected to capital improvement such as roofs, drive common area maintenance etc. There are many opinions of how much should be collected, but we believe that “typical” condominium associations should be setting aside somewhere between $60 and $150 per unit, per month.
Calculating a Reserve Fund: The standard method of determining reserve funding is taking the replacement cost and dividing that by the remaining life of the item. For example: if you need to new driveway in the community and the cost will be $20,000 with a remaining useful life of 5 years then you’d need to fund that line item at $4,000 per year.
What is the difference between a condo vs. coop? The difference between a co-op and a condo is that with a condo, you own that specific piece of property and you do not need anyone’s permission to buy it. With a co-op, you own a percentage of the building – kind of like shares of stock in a company.
The Good, Bad and Ugly About High Rise Living
Storage: You need a lot of storage? Keep in mind that space is at a premium in high-rise condos Be sure to ask about this when looking.
Noise: A condo tower is a community, and therefore it has rules which govern the community. One of those strictest rules is typically noise control. Most condo buildings have a “quiet period” from mid-evening to early morning during which residents must keep the noise down.
HOA Dues: The HOA fees are paid monthly to the association to cover the maintenanece, insurance and repairs for the building. These fees will vary greatly depending on factors such as the age of the building, the number of residents to share the costs, what’s included in the charge (some buildings include electricity), and the luxury amenities offered. A portion is also put aside for the reserve fund which is used for capital improvements ie: roof, driveway etc.
Lease Units: There may be restrictions around leasing out your unit. Some buildings forbid lease units, some limit them. Check the rules and regulations before deciding to buy.
Amenities: Benefits of high-rise living is use of the buildings common amenities. Pools, gyms, rooftop views, clubs to only mention a few. Of course the more extravagant amenities higher the HOA fees will usually be.
Parking: Most condos will come with one assigned parking in a common garage. The number of spaces has a great impact on the value of the condo
Reserve Funds: It’s important to find out what’s going on with the building association. Have there been any special assessments lately? Is the association’s reserve fund adequate? See of you can obtain a copy of the last several board meetings they discuss these items at each meeting.
Our Community Specialist can help with all these items so please contact them, they are on the left side menu of each community.