While there are many “short-sale” and other “bargain” condominiums on the market, the stormy winter we have experienced in almost all parts of our country needs to be factored in when purchasing a condominium unit. Roofs and other systems have been under a considerable amount of strain, and according to casualty insurance statistics, claims are at record levels.
The leaks through ceilings and walls can be plastered and painted over. The causes of the problems, however, can not be remedied with so much ease. Responsible condominium associations should be taking inventory of what will need to be done on a capital level when the warmer weather comes back. Very few Homeowners Associations are “flush” in these difficult times.
Where, in the good times, there was not a great need to be “defensive” in terms of the overall condition of the Condominium Building, those times have passed. There is now a real need to poke and prod “under the hood” shall I say to make sure you are not buying into a “Lemon”.
There follows are list of absolute “must do’s” in terms of any current Condominium purchase:
1. Ask a lot of questions.
Find out whether the Condominium Trustees are planning an assessment for a new roof or extensive system repairs. Once you are an owner, these are, at least partially, your financial obligation. If there are assessments coming, try to negotiate with your Seller to pay some or even all of planned assessments. Speak to other unit owners. Find out what they know. If they know they are going to see you on a frequent basis after you purchase, they will probably not lie to you. They will tell you what they know.
2. Do Not “Cheap Out” on Your Unit Inspection.
I refer business to one Home Inspector who charges almost $1,000 to do his work. He not only goes over the Unit with a fine toothed comb. He looks at the building systems, the furnace, the roof, the entry-way. His report is sometimes 25 pages. Even if he uncovers nothing that is wrong, the plethora of information that is in his report almost always justified its cost. I have had situations where using this person’s report gave my purchasing client leverage to exact major “price concessions” from the Seller. Please understand that with a purchase of the magnitude of an urban condominium, whatever money you spend is worth spending, if you get a “quality product”.
3. Have an experienced real estate manager, or even an accountant who specializes in real estate, go over the financial statements of the Condominium Trustees.
It is my view that the Financial Statements of a Condominium are extremely important to understand. Not many of us really have the ability to “sift through” the budgets and results of operations in a meaningful way. A person experienced in real estate management can determine whether the Condominium that you are interested in buying into is well run. Are there are charges which may be deemed “excessive”? Is there much “self-dealing”? Are all Unit Owners paying their monthly fees on time? Is the Board of Trustees diligent in using available remedies to make sure that any delinquencies are appropriately addressed? Compare last year’s Budget against this year’s expenses. Were the Trustee’s “way off” in their estimates of charges? if so, is there an “operating assessment” looming in the future? This can be a big deal, and you should know about it.
At Topkins & Bevans, we pride ourselves on giving responsible representation to purchasers. We review Condominium documents, minutes of the Trustee meetings and recent budgets. We direct your question to the Trustees and Seller so that when you do go forward, you are reasonably sure you know the animal you are dealing with. It would not be an accurate statement, however, to say that we can “do it all”. You need help from the other sources I have mentioned above. It is up to you to do some of this work yourself. You will probably not make a larger investment in your whole life. Use the resources available to make an informed decision