Key Questions to Ask Before Buying a Condominium

Every time I write about buying a condominium I get in trouble with condo lovers and their realty agents. My mother loves her condo, which is perfect for her situation.

But not all condominium dwellers are so happy. If you doubt this statement, inquire at most savings and loans and banks about their biggest source of real estate loan losses and you will unanimously hear the word condominiums.

But condos can be great homes. They often have amenities, such as recreation centers, swimming pools, tennis courts, golf courses and other extras unavailable with most other homes. However, before buying, ask these six key questions so you won’t make a major mistake and will be satisfied with your purchase:

What percentage of the condos are occupied by renters?

If the condo complex where you are considering buying has more than 25% renters, it is not a healthy sign. Many condos have rules regulating rentals. For example, the condo where my mother lives in Minneapolis limits rentals to 12 months. After that, the owner must either move in or sell the condo.

The problem with condo rentals is the renters often cause problems and their landlords usually vote against necessary or desirable capital improvements because they don’t want the monthly maintenance assessments increased.

Because of the drawbacks, many mortgage lenders refuse to approve condo loans if there are too many renters in the complex.

Are there any lawsuits against the builder or developer of the condo complex?

A recent survey of California condo complexes found at least 40% were or are involved in lawsuits against their developer or builder. This is probably typical of nationwide condo problems where the developer is usually anxious to make profits and often takes shortcuts to speed sales.

Most mortgage lenders now insist on a statement from the condominium owners’ association as to the status of any litigation. Lenders have learned to refuse to make loans to buyers where the condo association is involved in lawsuits. Such litigation should be a warning to buyers because if the case is lost, the condo owners may receive a costly special assessment for necessary repairs.

How is the soundproofing?

The No. 1 complaint of condo dwellers is poor soundproofing between adjacent units.

Before buying a condo, ask the neighbors up and down as well as sideways to turn on their TVs and stereos at normal level. Then go into the condo you’re considering buying to see if you can hear noise from adjoining condos. Listen closely for the bass notes, which are especially irritating.

Do the bylaws, rules and CC&Rs; (covenants, conditions and restrictions) contain unreasonable provisions?

Before making an offer to buy a condo, you should be given a copy of the bylaws, rules and CC&Rs.; Watch for limitations that may affect you, such as prohibitions on pets, rentals or number of vehicles allowed. Restrictions on children are probably unenforceable under new federal law.

What is the financial condition of the owner’s association?

Get a copy of the condo owner association’s latest financial report. Ask the president or treasurer if there are any pending special assessments, reserve deficits, planned assessment increases or other financial problems. Also check the condition of the common areas, such as hallways, grounds and garages for signs of inadequate maintenance.

How many condos does the developer own in the complex and are there any sweetheart deals?

Be wary if you discover that the condo developer still owns many units or if there are sweetheart deals, such as the developer owning the recreational area, which is leased to the condo association. If the developer still owns many units that are vacant or rented to tenants, this could have a depressing effect on appreciation of condo values in the complex.

Finally, before making a condo purchase offer, ask at least three current owners, “What do you like most and least about your condo and would you buy here again?” You will soon know if you should buy.