Condo ownership is an attractive option for people who want to own real estate but would prefer not to spend the time and effort maintaining a single-family home.
The key to buying a condo, like purchasing any piece of real estate, is to do your homework before singing a binding agreement. You’ll want to thoroughly understand the financial and governance issues at play to be as informed as possible about the major financial commitment you’re about to undertake.
Here are four things to consider before you purchase your Chicago condo:
Rules and Regulations
Make sure to read the condo association’s bylaws, which discuss the rules of operation for the condo. Are animals allowed? Are there quiet hours? How much are dues, and is there a late fee? Also ask for a copy of the minutes and agendas from past association meetings. This can help you determine the association’s position on issues, which topics come up for discussion most frequently and whether the rules are something you could live with, or would dissuade you from buying a unit in the complex.
Money Money Money
In addition to the cost of a monthly mortgage payment and property taxes, each condominium owner will have an assessment fee that is used toward a proportional share of the common expenses of the condominium. These expenses typically include, but are not limited to: gas, water, electricity for common areas, lawn cutting, snow removal, parking lot maintenance and hallway cleaning. The assessment may be the same for each unit owner or it could vary according to size or initial unit value. This fee is not voluntary, so make sure to understand what is and is not covered under the assessment. You’ll also want to understand what right the condo has to change the assessment fee, due to escalating utility costs and other increasing prices. This can help you determine if you are able to afford the totality of living in the condo complex.
Study Up
Although the sheer volume of material you need to collect and examine might seem very taxing, it’s important to become as informed as you can. If you are moving into a new condo building, examine the builder’s public offering statement, which contains valuable information such as the builder’s most recent condominium projects, any rent restrictions and a list of common amenities and known assessments. It’s also important to look at the reserve study, which is an analysis that determines whether the condo complex’s financial reserve is comprehensive enough to allow for future expected costs of roof repairs or any other expenses. You’ll also want to examine the condo’s resale certificate, which a unit’s current owner is required to provide that shows information such as expected special assessments, ongoing litigation and the amount of reserves available for repairs. The resale certificate includes all the documents the developer handed over to the owner.
Look and See
Asking condo association board members and unit owners is one way to unearth information about living in the condo building. Ask them how the condominium is operating and any major issues or concerns they have had. Just driving by and looking at the landscaping and parking situation can be very telling too, in terms of how the area is maintained.
Condo ownership can be incredibly rewarding, but it’s important to understand what’s required of you as an owner and the current financial state of the condominium association before you make any purchasing decisions, so that you will be able to enjoy your new home to the fullest!
