Before purchasing a condominium – Victor Hussein

CondoQUESTION: Is there anything that I can  research when I am looking at purchasing a condominium property?

ANSWER: As always, one cannot research enough before making any purchase, whether it is a condominium or otherwise.  However, there are several considerations to be had prior to making a decision to purchase a particular condominium property.  Below are just a few points that I would suggest considering and researching:

1) Reserve Fund: You should verify the extent of the reserve funds held by the condominium corporation.  Briefly, this is the money the condominium corporation has available to it to maintain and repair the entire condominium property.  The fund is built up via the “common expense fee” or “condo fees” — a portion of every unit owners monthly common expense payment is put into the reserve fund and these funds are used on a need basis.

In the event the reserve fund is low or even worse, completely depleted, and there is a repair to be undertaken, the shortfall between the reserve funds and the actual cost of repairs will be apportioned between all the unit owners above and beyond the monthly common expense fees — what is generally called a “Special Assessment”.  It is therefore imperative to ascertain the size of the condominium corporation’s reserve fund.

2) Property Management: Commonly, the entire condominium property is managed by a contracted management company.  This company generally looks after the maintenance (such as snow removal, lawn care), security, repairs, renovations, and so on of the condominium property.

Find out a little bit about the management company hired to look after the condominium property.  How long have they been in the business?  Do they look after any other condominium properties?  Do they maintain the property well and in a timely manner or do they let the lawn get out of control?

3) Status Certificate: Request a recent status certificate (or what was known as an estoppel certificate) and review it carefully.  This document will provide a  very good insight into the  condominium corporation.  Among other matters, this document details the size of the reserve fund held by the condominium corporation, any lawsuits pending against the corporation, and, any major repairs scheduled.  You should review this document with either your real estate agent or your lawyer.

4) Unit Holders: Who are the other residents of the condominium? By that  I mean, are most of the other residents simply renting or are they the actual owners of the units?  Are most of the units vacant?  If so, why?  Remember, a high vacancy rate could effect your ability to sell the property in the future.

5) Rules and Regulations: Almost all condominium properties are governed by the Condominium Corporation’s rules, by-laws, and regulations.  These rules and regulations govern a  variety of matters including what changes you can make to the outside of your particular unit.  The rules and regulations may also govern what changes you can make to the inside of your own unit as well.  So, for example, you may need to get approval from the condominium corporation before renovating your kitchen.

I would therefore recommend reviewing these documents so that you are aware of your rights and restrictions.  The rules, by-laws and regulations are there to protect each owners interests, and, to protect the integrity of the condominium complex as well.

Finally, I would highly recommend retaining the services of a licensed real estate agent or some professional assistance.  Someone who deals with real estate on a daily basis will know what to research, and, where to find the needed information.  This can make the whole process of searching for the right property much easier. Best of Luck!

More from Victor Hussein as he talks about:

Title Insurance

Mortgage Renewal

Pricing Your Home Correctly

Fences and Property Lines

Tips and Traps when buying a home

Home Sellers and real estate commissions

The difference between a condo and a co-op

Victor Hussein is a Kitchener Waterloo lawyer, specializing in real estate.

 

 

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