When you’re shopping for a condo, knowledge is power
A little extra work and careful research will surely pay off, Dennis Faulkner writes.
A condo can be a great option for many who want a simpler lifestyle. Eliminating snow shovelling and lawn maintenance can be attractive to those who are busy or just don’t like being out in the middle of winter scraping ice off their sidewalk. The exterior maintenance and upkeep is typically done by the condo corporation. Many condos will even have underground heated parking, which makes our winters more bearable.
With condo ownership, the concern for many is fear that there may be a problem with the condo that requires a cash call in a special assessment. We’ve seen a special assessment for over $60,000 per suite in a downtown Edmonton apartment. But it is rare that a condo will require such a costly cash injection. On a condo we own, we were faced with a $15,000 special assessment last year when it was discovered the sewer lines needed to be replaced. While this came as a surprise, the condo board was forward-thinking and put together a loan option for those unable to pay as a lump sum. There are a few ways to reduce the risk of an unexpected special assessment on the condo you are considering to purchase.
First is what I call the walkaround. When you are buying a condo, take a walk around the entire building. What you want to look for is the general condition of the building itself. Is it well-kept and are they keeping up with the cleaning and general maintenance? Is there loose siding or apparent disrepair? If there is, it can be a sign of deferred maintenance, which is one of the major causes of unexpected cash calls.
Second, start knocking! Once you have identified a candidate, why not talk to others who live in the building? Asking questions can help with peace of mind about your potential purchase or even notify you of potential issues that may dissuade your purchase. Often you can get information that has not yet been recorded in the condo documents.
Which brings us to the third point — review those condo documents. We highly recommend everyone buying a condo read the documents carefully. When buying a condo, you are buying into a corporation. Knowing how well that corporation is doing is vitally important. The bylaws will go over the rules of the condo corporation. It will outline rules regarding things such as pets, noise, guests, parking, who is responsible for maintenance, and so on. Make sure there is nothing in there that will negatively impact how you want to enjoy your home. The condo board meeting minutes go over the day-to-day operations of the condo and can offer insight into specific issues or problems. Make sure you read not only the monthly minutes, but also the minutes from the annual general meeting.
The reserve fund study, which is required every five years for all condo corporations, is like a massive home inspection of the entire complex. It will outline the life expectancy of all the condominium’s components and the expected replacement cost. Along with that is a reserve fund plan that goes through what the corporation should have in the coffers to ensure the recommendations in the reserve fund are met. Ideally, the fund will be on track with the recommendation in the reserve fund plan. If you are not up for all that reading, you can hire a company that will review the condo documents for you and provide you with a summary. The cost is about $500 and may well be worth every penny.
Fourth, find a Realtor you can trust with experience in condos. They can make a big difference in helping you make a good decision with your condo purchase. And, of course, there’s the condo fee. Take the time to learn what it includes and doesn’t include. Generally speaking, apartment condos will include heat, water and sewer. Power is only sometimes included in the fee.
Condominiums, when managed well, can be an affordable option that offers a more carefree lifestyle so long as buyers inform themselves before committing to a condo of their own.