Six questions to ask before buying a condo


If you’ve never purchased a condominium, you may be surprised at the myriad of issues to consider. It’s quite different than buying a single-family home. Here are six questions to ask:

  1. What are the rules and regulations and can you live by them? Every condo complex has a Homeowners’ Association (HOA) that has by-laws and rules and regulations that you must obey. You’ll want to be sure that they fit your lifestyle.
  2. What is the condo fee and what does it cover?  How has it changed over the past five years?  This is important to get a handle on your costs and the stability of the complex.
  3. Have there been special assessments and are any planned? While sellers must tell you about finalized assessments, others may be under consideration  It’s a good idea to review the minutes of the past six to 12 months of board meetings to understand potential issues. Look at the budget and find out how significant overruns will be covered. Also ask about any pending litigation.
  4. How much is saved in reserves? Condo fees typically cover maintenance and operating expenses, plus a contribution to reserves for future capital improvements and unexpected events. Be sure there is a capital improvement plan and that reserves are adequate. A shortage will mean assessments or higher fees. You’ll want to ask about any unexpected structural or system issues that have occurred in the past few year.
  5. What percentage of the units are rented? Lenders often require a certain percentage of owner occupancy for mortgage approvals. Beyond that, owners tend to be more vested in the property, so it’s a good idea to look for a high owner occupancy rate.
  6. What does the Master Insurance policy cover? Although the condo association will have a master policy, you will need your own condo insurance, also known as HO6 insurance. What it needs to cover will depend on the scope of the master policy, so it’s important to get a clear understanding of the master policy and review your needs with your insurance agent.