When buying a condo there is more to consider than just your unit. A condo is just one piece of an association. Whether you are buying into a two unit association or a 200 unit association, there are things you should know before you sign on the dotted line.
1) What am I buying? When buying a condo, you purchase the unit inside the walls, but, that may be only one piece of the purchase. It is important for you to understand the “ownership” of any decks, porches, yard areas, garage spaces, parking spots, storage areas etc. These spaces can be deeded for exclusive use with your unit, used in common by the association or used by assignment or easement by one or more unit owner. Be sure to review the Master Deed and Unit Deed to determine the extent of your “ownership” and whether you or the association is responsible for the maintenance of these areas.
2) Show me the money! As part of an association you and your neighboring unit owners are collectively responsible for covering the costs of the building as a whole. Toward this end, each unit owner is assessed a monthly condo fee. Before purchasing, be sure you understand what the monthly condo fee is and what it covers. Does it cover master insurance, building maintenance (i.e. roof, exterior window/wall repairs, porches, walkways), water and sewer, trash disposal, snow removal, landscaping, heat or electricity etc.
In addition, associations will sometimes face large building repairs requiring the unit owners to pay additional monies aside from the monthly fees. These charges are called Special Assessments. It is important to ask for a history of special assessments in the association and to ask if any are planned for the near future. Most associations will have a capital reserve fund (paid for by portions of your monthly condo fee) which they will build over time in order to help defray the cost of large repairs. Check into the reserve fund for the association – a guideline is a reserve of at last 10% of annual condo fee revenues.
Two quick financial notes – While there is a master insurance policy on the building as a whole, you are typically not insured for “walls in”. None of your personal possessions, or the interior walls/ceilings of the unit are covered by the master policy and you should have your own personal policy in place - If you are seeking a mortgage, your monthly condo fee, or a portion thereof is added to your monthly mortgage payment when it comes time to qualify. Be sure to keep that in mind when you are looking at unit prices.
3) Know the rules. Each association is governed by legal documents - Master Deeds, Unit Deeds, Declaration of Trust, By Laws, Rules and Regulations, and HOA Covenants and Restrictions. Each of these addresses specific issues of ownership and behavior within the association including practicalities like noise issues, pet ownership, your ability to rent your unit, use of common areas, what the master insurance covers etc. It is critical that you and/or your attorney review these documents and understand them fully. Smaller associations are typically managed by the unit owners, larger associations are usually managed professionally by a management company. Find out who the management company is and perhaps do your own research into the level of quality service they provide – looking at the building is often a good guide as well, is the property clean and well groomed etc. So, fully armed and aware, time to purchase that condo you have been dreaming of.
For more information on buying a condo in Boston and for listings of condos for sale in the Greater Boston Area, visit our website avenue3re.com. and take a look at our condo glossary or terms.