Friday, November 05, 2010

Condo Buying Tips

Living in a condominium is like living in a small village, albeit you may not know the names of everyone. A condo has a board of directors made up of its residents much like a town council, and likewise it has rules, restrictions, bylaws and even fines for misbehavior such as loud, noisy parties at 4 AM on a Tuesday morning.

Heck, there might be a condo across the street that looks EXACTLY the same as your condo, but it may be a completely different community when it comes to the way it is governed and its rules.

It pays to keep these things in mind when finding the condo unit which is right for you.

1. Condo Parking, Pets and People

You might own your own parking spot or it might rented from the condominium, and this in turn will affect whether you can sell/rent out your parking space or if you can rent/buy another parking spot for a second car.

Many condos restrict or prohibit pets such as dogs and cats, and sometimes even restrict the quieter pets like spiders, goldfish, snakes, gerbils and (heaven forbid) beekeeping.

There may also be rules restricting how many people that can live in an unit or even just occupy it temporarily in the event of a party, barbecue on the balcony, have all your yoga friends over for a vegan lunch or whatever. There might even be rules restricting you from putting a satellite dish on the outside wall. Other restrictions include when you can play musical instruments, use the pool or the party room.

2. The Condo Reserve Fund

The condo board needs to keep track of how much money is in the reserve fund and how much is needed in order for them to pay for cleaning and maintenance of the lobby, hallways, elevators, furnace, roof and parking garage. They must always be maintained and repaired or else they are liable for lawsuits for failing to fulfill contracts with condo residents. Thus the condo needs a reserve fund for emergency repairs. Often the prices of utilities, security, landscaping and snow removal go up too, so expect inflation. If there is no reserve fund, be very wary of buying.

3. Condo Management and Professionalism

Most people on the condo board of directors lack any kind of business, legal or people skills needed to manage their building, let alone dog grooming business. They are on the board because they ran for the position and got voted in on popularity. Nothing to do with skill at all. However the are responsible for a budget that could be in the millions and must also deal with sometimes complex disputes between owners and the condo corporation. This requires a working understanding of the Provincial Condominium legislation that governs their condo. Even simple decisions such as when to turn on the air conditioning requires basic understanding of how it works and how the AC will affect unit owners in different ways, like whether they are on the south or north side of the building.

That’s why a condo needs a professional property manager. They know these things inside out and if they don't do them properly, then condo residents complain. If the condo you are buying doesn't have a property manager... then cross your fingers and hope you never run into an incompetent and belligerent elected-member of the condo board. It will be guaranteed to be headaches galore.

4. Insurance Deductible

Does your condo insurance policy have a $5,000 or $10,000 deductible? Make sure you speak to an insurance specialist about obtaining your own unit coverage to protect your belongings and any renovations made to your unit.

5. Were those renovations legal?

If any alterations to your condo were made you should check to make sure that they got the necessary approval via the condo board. Otherwise you might have to get it approved yourself, even though its after the fact, and this can be costly. You may end up paying for further inspections and certifications by plumbers, architects or engineers, things that should have been paid for by the previous owner.

6. Do the condo residents behave?

Call it schoolyard justice and bullying if you want to, but many condo residents don't play fair. They get into feuds about the stupidest little things and the next thing you know they're both running for condo president so they can try and kick the other person out of the building. Its ridiculous.

Before you buy its recommended you knock on some doors and ask your would-be neighbours about the building and how happy they are about other neighbours. Remember to look at the minutes of the last annual meeting. Were there many items disputed? Be suspicious if they haven't had a meeting in over a year.

7. Status Certificate

This handy little document issued by each condo shows an up to date copy of the budget, the last annual meeting, whether there are arrears / expenses, special assessments and a Reserve Fund Study. Your purchase agreement MUST be conditional on you being satisfied with the contents of this very important document. Review the document carefully with your real estate salesperson and your lawyer.

So remember these things to ask!

Parking, Pets and People

Condo Reserve Fund

Property Manager

Insurance Deductible

Legal Renovations

Condo Disputes & Annual Minutes

Status Certificate

See Also:

The Future of Condos

Toronto Condos and Highrises

Tea Leaves for Toronto Real Estate

The Toronto Real Estate Market

The Housing & Mortgage Industry

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