Condos are an excellent home choice for many reasons, as they take a lot of the upkeep responsibility off of the owner. However, every condo company is unique, meaning buyers need to be aware of what they are getting into.
Some aspects change condo to condo, so when buyers are looking, they should be sure to find out about certain rules and regulations that the company may not necessarily have mentioned during the deal. When they ultimately seal the deal, the buyers will be happy to know exactly what they’ve signed on for, where they are free to make changes, and what they are and are not responsible for.
1. Does the condo have a reserve fund?
Condos will often put part of all the unit owners’ monthly condo fees towards a reserve fund, which would be used in case of severe damage to the condo, emergency repairs, or major repairs. Brand new condos wouldn’t yet have a reserve to handle such major costs, but if they take a portion of all the funds every month, when the time comes for big renovations, condo owners won’t get stuck with a big bill.
If the condo has a reserve fund, it is also a good idea to find out how much and whether it could support the funding of major repair work.
2. What property restrictions apply?
When a buyer purchases a condo, they only own the unit itself, while areas around the unit are common property. Common property is space that must be shared among all the condo owners in the building or in the condo community, there may be restrictions on what people can do with it.
For example, they may not be able to park large vehicles like RVs, boats, or ATVs there, even if it is a designated parking space since technically the space is considered common property, and not a part of the unit itself.
3. Where are the unit boundaries?
Unit boundaries may change from condo to condo. Some units may have their own private yard which is considered part of the unit. Others may not even consider the front door to be part of the unit. These boundaries create restrictions for owners on what they may and may not do to certain areas of their home, even if they feel that it should be considered part of their unit.
For instance, even a balcony may not be considered part of a unit, since it pertains to the outside of the building, and therefore owners may experience restrictions on what they may and may not place on it.
4. What is the unit factor?
Since condos are individual units surrounding common area, all condo owners own a percentage of that common area. The unit factor is the exact percentage of the common area that the owners actually possess. It is a determining factor in how much they will have to contribute each month, and could also affect the owner’s voting rights in decisions made by the board. Unit factor could be determined by unit location and unit size. Unit factor may also be referred to as proportionate share or percentage of ownership.
5. What do the condo fees cover?
There is a huge list of things condo fees can cover, but it can change depending on the condo. Some covered services are snow removal on walkways and driveways, lawnmowing and lawn maintenance, and the cleaning and caretaking of all common areas – this includes any area outside of the individual units, including pools, hallways, recreation rooms and exercise rooms/gyms. Condo fees can also cover heat and cooling maintenance and other maintenance, as well as the salaries for hired staff.