There can be an array of issues for which to watch when buying a home. These issues can vary from quite minor to very extensive and can cost just a few bucks to thousands or even tens of thousands of dollars or more to repair.
Some people might think that buying a condo would result in a lessening of the potential pitfalls to be encountered when going through the buying process. And while in some cases they may be right, this doesn't mean that there still aren't a litany of possible issues that could result in additional time, effort, and costs in order to rectify.
We thought we'd covered our bases with an inspection of our last home, yet when we sold three years later, we were hit with nearly $2,000 in inspection and seller requested repairs.
A home inspection, even when it comes to a condo where they may not be as many areas or exterior spaces to inspect, may still reveal undiscovered issues. And it can be easy when having a condo inspected to stick to the interior areas, kind of forgetting the rest. Therefore, when we bought our recent condo, I followed the inspector everywhere and made sure to ask a lot of questions. I even followed him up the steel-rung wall ladder and up onto the roof of our condo to inspect the condenser unit for our HVAC system and the roof itself.
While everything looked fine, and there was really only one issue with the shower that we asked the sellers to repair, it was still a $100 repair that we might have had to cover ourselves were it not for the inspection. Plus, the inspection acted as a great way to familiarize ourselves with what was to be our new home.
A friend of ours in Florida owns a condo and has been hit with a variety of special assessments over the years for things like balcony railing repairs, façade repairs, elevator repairs, etc., and which have cost him tens of thousands of dollars in addition to his regular monthly assessments.
While the contract we had with the sellers of our condo stipulated that they agreed to divulge any outstanding or planned special assessments, we're not people to take someone's word who we don't even know when it comes to big ticket costs. Therefore, we contacted the management company who works with and maintains the financials for the condo building. We spoke with a representative who gave us current and future work plans and assured us that there were no major projects underway or upcoming.
Extras and Reserves
While we were speaking with the representative from the management company, we also asked her about the condo cash reserves. This is money set aside for those big ticket costs I mentioned a moment ago and that can help avoid large lump sum assessments being handed off to owners.
Our condo complex's reserves were at about $78,000, which is a nice chunk of change should something unexpected come up in regards to major repairs.
One additional item for which we weren't prepared when preparing to close on our condo was a "condo move in fee". Actually, it is a move in/move out fee, but since we were only moving in, there was an additional cost of $150 to cover this unexpected extra.
We were surprised to find that we wouldn't be getting the condo bylaws (the rules governing the condo complex) until closing unless we wanted to pay a $50 fee. However in speaking with the management company representative, she mentioned that we could find the majority of such rules at the Illinois.gov website. The only difference would be the additions to such rules added for or by the actual complex to which we were moving. Therefore, we took some time to find these laws at the state site in order to read up on exactly what we were entering into.
And while I'm no lawyer, I did find that it was worth my time to review these laws in order to pick up on some important items pertaining to what can and can't be done by condo owners and associations, as well as how condominiums and condominium owners are protected and/or bound under state law.
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The author is not a licensed financial or real estate professional. The information provided in this article is for informational purposes only and does not constitute legal, financial or real estate advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.