Be a Smart "Condo Consumer!"
Many people in Charleston--busy professionals, singles, older folks, and so on--enjoy condominium ownership. They like being free from routine exterior maintenance and yard work, and enjoying amenities like swimming pools and tennis courts. From one bedroom flat style condos to tri-level condos on the water you can find a property to suit any lifestyle and budget.
There are many pluses to owning a condominium, or "single family attached" home. But there are other factors you must also consider. Of course, you know there are monthly condo fees over and above your mortgage payment. But there's more to the story. So, let's take a few moments to review some of these considerations.
Insurance Issues Between The Homeowner and the Condo Community
When you are considering a purchase within a condo community, it's a good idea to ask to see their Certificate of Insurance. This will tell you:
- Replacement costs: This is the cost to rebuild in the event of a fire or other covered calamity. You need to be sure that the coverage listed is truly enough to repair the damage. Also, look for a "building-ordinance clause." This means that there is enough coverage to bring the repairs in line with any code upgrades that may have occurred since the original construction.
- Who covers what? The certificate of insurance should explicitly list the items covered by the condo association's insurance. Anything not listed will be YOUR responsibility to insure, along with your personal property.
You can learn a lot from the Certificate of Insurance. Don't be afraid to ask to see it. And if you can't quite understand it all, get help from someone knowledgeable and qualified to explain it to you.
Check Out the Condo Community's Repair Fund
Every condominium community (any one that you would want to live in, anyway) keeps a fund to maintain the community against everyday wear and tear...non-disaster stuff like worn roofs, blacktop for the parking lots, etc. The amount of money they keep around is often determined by the age of the community, i.e., a newer community needs fewer repairs, while an older one needs more.
Often, communities add up the total replacement cost of all the repairs they are responsible for and, factoring in the age, keep a certain percentage of that total on hand. Some experts say that a new community (10 years or newer) should have 10% of that cost on hand. 10 to 25 years, maybe 20 to 30%. Over 25 years, as much as 50%.
A "Reserve Fund Review" is where you will find this information. Any community eager to illustrate that it takes maintenance seriously should have no problem showing it to you.
Rentals, Rentals Everywhere
Right now, homeowners in Charleston and elsewhere who can't find buyers are renting out their homes until the market improves. If you purchased a condo and had to rent it out in the next few years...could you? What are your community's rules about that?
On the flip side, let's say you plan to stay forever, but you see more and more of your neighbor's homes turning into rentals. How will you feel about that?
Ideally, there should be policies, in the bylaws or in amendments, to address the rental situation. Ask to see them. And don't be afraid to get the pulse of the community from your potential neighbors.
Rights, Rules and Responsibilities
Your condo community's policies are meant to enumerate and protect the rights of the community and the homeowner, and to help ensure a pleasant ownership experience for you and your neighbors. Ask to see a copy of all pertinent policies. And don't be afraid to ask a real estate lawyer to check them out.
Finally, a Word from Uncle Sam
There are many programs in place that help consumers finance their home purchase. FHA loans are very popular, for instance. It's important to remember that if you plan to secure an FHA loan to finance the purchase of your condo, the condo community must be FHA approved. You can find out at https://entp.hud.gov/idapp/html/condlook.cfm
Do Your Homework!
The bottom line is this: You are buying a home. Freestanding or attached, it's still the biggest purchase decision you will ever make. So take your time and do your homework. Ask to see the bylaws, and read them carefully. Make your purchase decision one you will be happy with for years to come!
Interested in condo living? Contact Heather Lord at hlord@HeatherLord.com for the full scoop on Charleston condo communities and listings!