~ Questions to Ask the Condo Board ~
Before you buy, contact the condo board with the following questions. In the process, you'll learn
how responsive - and organized - its members are. Youlll also be alerted to potential
problems with the property.
- What percentage of units is owner-occupied? What percentage is tenant-occupied?
Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
- What covenants, bylaws, and restrictions govern the property? What grandfather
clauses are in place? You may find, for instance, that those who buy a property after a certain date can't rent out their units,
but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And
have an attorney review property docs, including the master deed, for you.
- How much does the association keep in reserve? Plus, find out how that money is being
- Are association assessments keeping pace with the annual rate of inflation? Smart
boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine
if the assessment is reasonable, compare the rate to others in the area.
- What does and doesn't the assessment cover? Does the assessment include common-area
maintenance, recreational facilities, trash collection, and snow removal?
- What special assessments have been mandated in the past five years? How much was each
owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be
a red flag about the condition of the building or the board's fiscal policy.
- For multi-unit condo buildings, how much turnover occurs? This will tell you if
residents are generally happy with the building. According to research by the NATIONAL ASSOCIATION OF REALTORS®,
owners of condos in two-to-four unit buildings stay for a median of five years, and owners of condos in a
building with five or more units stay for a median of four years.
- For multi-unit condo buildings, is the condo building in litigation? This is never a good
sign. If the builders or home owners are involved in a lawsuit, reserves can be depleted quickly.
- Are multiple associations involved in the property? In very large developments, umbrella
associations, as well as the smaller association into which you're buying, may require separate