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Health & Fitness

Better Find Out About That Condo Association You're About To Buy Into.....

The roof's falling in, the heating system dates from the Hoover administration, the neighbors hate each other, there's no money to fix anything. Or not. Your choice.

Finding out all you can about the condo association you are about to buy into is an extremely important part of the Boston condo purchasing process.Whether a client of mine is buying into a large professionally managed condo association or a small, self-managed one, I want them to get all the information they need in order to make a fully informed purchase.

The first piece of information the buyer generally gets is the set of condo documents. They can include the master deed for the association, declaration of trust, rules and regulations, bylaws, meeting minutes, etc. That being said, sometimes these documents can be combined, and in the case of smaller associations, meeting minutes are not always taken.

These documents ("condo docs") should be shared with the buyer-side attorney, who has seen documents like these many times and knows where the trouble spots can lie. Are pets permitted? Are rentals permitted, and what is the minimum rental period? Does the association have the first right of refusal in the event of the sale of the unit? What type and extent of homeowner's insurance do you need? There are all sorts of potential issues, and you want to make sure that your attorney ferrets them out.Also, if there are minutes, are there phyisical issues with the building that have been discussed and will be repaired/assessed? These can be very expensive problems. Which brings us to...

The home inspection. A good experienced home inspector, who will not only make note of any issues within your prospective unit, but make note of potential costly building issues like roof replacement, brick/mortar pointing issues, heating systems, etc.. This in turn leads us to the association budget.

A well capitalized budget, particularly in the case of an older building in less than ideal condition is important.Some buildings have minimal reserves, in exchange for lower monthly condo fees, and "special assess" for any repairs, which can be costly. In many recently renovated buildings, there can be low reserves, particularly in smaller projects. Which can be okay if you're pretty sure you're not going to have to dig deep for big projects.

Another thing to be aware of, with regard to the association budget is that since mortgage approval has become more problematic, banks now want to scrutinize these budgets. They are particularly looking for a contibution to reserves in the equivalent of 10% of the annual revenues (condo fees). I cannot tell you how many times recently I had to slip an association a sample budget because they weren't aware of this (If you are procuring an FHA insured loan, the FHA will want to see a separate reserve account). And also, the bank will want to see a line item to make sure you've accounted for the deductible on the master building insurance policy.

This is a lot of stuff, and there's lots more where that came from. That's why you need a great team consisting of an experienced real estate agent, a recommended real estate attorney, a great home inspector who know how to explain physical problems, and an experienced, recommended, responsive, knowledgeable lending officer.

Getting further anecdotal info from bulding management, Trustees, and even potentially neighbors is very important. Unless my buyer wants me there, I get out of the way as much as possible, and I get the listing agent out of the way because I want there to be no spin involved. This means that in the case of a larger association, I want my buyer to speak with the management company as well as a building trustee. The management company will have access to and knowledge of all the financial and physical aspects of the building. So will the trustees, but they will also have the larger context that comes from being a building resident.

In a smaller association, you will definitely want to speak to a trustee, and maybe even another one of your neighbors, if possible. In either case, you want to ask out about physical and financial aspects of the association, plus some of the less tangible aspects of what it’s like to live there.

Call me at 617 584 9790 with questions or if you’d like some help in your purchase. You can also click Get in Touch.

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