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The Real Deal
Condo fees are part of the cost of ownership
Condominiums can be a great choice for a first home, but it's important to balance benefits against potential liabilities and restrictions. Condominiums often appeal to people wishing to break into the housing market as well empty nesters or couples whose children have left home. Condos are also popular as second homes at resorts, in the mountains and the woods or at the seashore.
Whether it's an apartment in a high-rise, low-rise or a townhouse development, any condominium purchase entails special considerations. A condominium includes a residential unit and shared common facilities such as hallways, laundry rooms, storage areas, bicycle rooms, property, roads, parking lots, paths, walkways, a roof deck, a clubhouse, swimming pool or tennis courts. In addition to the mortgage payment, there is generally a monthly condominium fee to cover maintenance costs for these areas. Prospective buyers should find out if the condo fee includes utilities, and, if not, how high utilities run on a monthly basis.
Determine whether the building is cable-ready and has adequate security.
Checking the association's bylaws and the master deed for restrictions on how to use the property before buying is an important step. The bylaws are written to serve the interests of all owners and the community. Be sure to understand how the condominium documents may affect lifestyles and the ability to resell the unit in the future.
Take a look at the condition of the surrounding property. If it looks as if the roof next door might need to be replaced, keep in mind that all owners share in replacement costs for common elements. For this reason, it's important to look at the finances of the condominium association. For example, if there is no budget to cover roof replacements, there might be a special assessment placed on all unit owners to cover the costs for a new roof.
A well-managed condominium association budgets for major repairs and has reserves for emergency replacements. When reviewing the financial status of the association, check to see if the maintenance fees are current; otherwise unpaid fees may become the responsibility of the new condo buyer.
Some condominium developments lease their common facilities instead of owning them. If this is the case, future increases in lease payments could affect the monthly condominium fee.
Make a point of visiting the complex and ask residents how they feel about their home, the neighborhood, the condominium fee and the responsiveness of the condominium association to meeting their individual needs.
The majority of condominium associations are well run, but reviewing all of the condo documents before signing a purchase agreement will ensure all issues are understood. Becoming actively involved in the activities of the association by attending meetings or by becoming a member of the board of directors is a good way to protect financial and lifestyle interests.
Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.siliconvalley-realtors.org. Send questions on any topic to jnewton@jnpr.com.
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Saratoga, California Since 1955
