Buying a Condo 101

The 5 Key Things to Know About Condo Ownership

When it comes to homeownership, not all properties are the same. While purchasing a single-family home is relatively straightforward, buying a condo comes with a unique set of considerations. From understanding the type of ownership to navigating the rules and regulations of the condo association, it's essential to be informed before going under contract. Below are five key aspects every potential condo buyer should understand.

1. Understand the Type of Ownership

   
   

   A good starting point is to determine the type of ownership of the property. In most condo buildings, each unit has separate and distinct ownership, while common areas—such as lobbies, hallways, and amenities—are jointly owned by all residents. These shared spaces typically require upkeep, which results in management fees. Understanding your financial obligation to the complex is important before proceeding with a purchase.

2. Condo Associations & Management

   
   

   Whether the complex is governed by a single president or an entire board, most condos have an association that makes decisions on behalf of the homeowners. In some cases, an outside management company will be brought in to run the day-to-day maintenance. Before committing to a purchase, get a feel for how the homeowner’s rights are represented early on in the negotiation process.

   
   

3. Rules & Regulations

   
   

   Condo boards and associations implement rules and regulations outlining the homeowner guidelines to draw a line around what the association controls to maintain uniformity and protect property values. These can range from pet restrictions, parking regulations, and patio furniture usage to guidelines on exterior modifications and noise levels. Always request and review the condo bylaws and governing documents to avoid surprises down the road, especially if you have your sights set on a renovation project.

4. Fees & Assessments

   
   

   It’s typical for condo owners to contribute to the maintenance of shared spaces through monthly fees, which can range from modest amounts to several hundred dollars, depending on the building's amenities. For example, a high-rise with a gym and pool will typically have higher fees than a smaller building with minimal amenities. Additionally, be aware of potential special assessments, which are one-time charges levied to cover major repairs or improvements. Make sure you understand how these costs will impact your budget.

   
   

5. Financial Health of the Association

   
   

   When you buy a condo, you’re also investing in the financial stability of the association. You have just as much room to evaluate the association’s financial health as your lender does you when securing your mortgage. Review the association’s reserve fund and financial statements to ensure they are in good standing. Make note of when the last special assessment was made, and how much the association has in reserve. If there is little reserve, it might be the case of poor financial health within the property. This might also be a sign of some unforeseen expenses coming your way in the future, like a roof replacement project. An association with a strong reserve means they are prepared for any unexpected issues to be handled, and you can feel more confident that there is nothing hiding behind closed doors.

   
   

Final Thoughts

Failing to understand and investigate the unique pieces of the condo purchasing puzzle can lead to costly mistakes, but it’s not always obvious when you go through the process. Make sure you are protected when making such a large purchasing decision by consulting a knowledgeable real estate attorney. At Anselmo & Wojcicki, LLP, our legal experts have years of experience helping buyers navigate the complexities of condo purchases. Contact us today to ensure all your bases are covered.

About Anselmo & Wojcicki, LLP

Anselmo & Wojcicki, LLP is a multi-disciplinary law practice based in Schaumburg, Illinois, specializing in real estate, estate planning, tax planning, business formation, and the sale and purchase of businesses. Our commitment to our clients and our values set us apart from the crowd. Our team of legal specialists has a wealth of experience and expertise to help you meet your legal needs. We are dedicated to providing quality service and building lasting relationships with our clients.