May 25, 2024

Jocuri

Mad about real estate

Pros And Cons Of Buying A Condo

The term condominium, condo for short, is a commonly misunderstood word. A condo describes a method of owning real estate, not a particular style of building. A single condo is one housing unit within a larger complex of units, and a condominium complex is used to describe the collection of all units within the same development. The type of unit could be an apartment, a townhouse (which is sometimes referred to as a row house), or any other multi-unit property.

When you buy a condo, what you actually own is the inside of the unit itself; all unit owners own everything outside of their unit, proportionately and collectively. For example, you as an owner of a unit and all the other unit owners collectively own hallways, stairs, pools, recreation centers, grass areas, etc.

Since all unit owners collectively own anything that is outside of the individual units, all owners must provide funds to maintain these common elements. In most communities, owners elect members from their ranks to form a Condominium Association (CA), whose charter is to establish a budget, collect dues from unit owners, manage the repair and maintenance of common elements, and to oversee the affairs of the community. Many CAs hire Property Managers to undertake these functions, but the responsibility and accountability remains with the CA.

The Condominium Association is responsible for determining the amount of money needed to manage the affairs of the community. In addition, the CA must maintain sufficient funds in reserve to address any emergency costs and to prepare for larger maintenance projects that occur less frequently (e.g. replace all roofs in the community). Based on anticipated expenses and the need for reserve funds, the CA sets the amount of the monthly “condo fee,” which must be paid by all unit owners. The CA can also impose special assessments on the owners if unforeseen expenses are incurred.

Condos offer a variety of benefits to their owners. Condos tend to be less expense than real estate owned by other methods, many communities offer amenities such as pools and tennis courts, and there is no hassle of personally maintaining a yard or others structures outside of your unit. So if you like living next to many neighbors and want access to a variety of amenities at an affordable price, then condominium ownership may be a good option.

While condos tend to be less expensive than other forms of real estate ownership, there are also drawbacks. Condo units tend to be connected to one another, which increases the chance of hearing noise from adjoining units. Condo owners usually do not have their own yard because individual unit owner do not own the land underneath their unit. Unit owners must share available resources such as the pool, tennis court, recreation center, etc with all other residents. The monthly condo fee mentioned above tends to increase every year in most communities, as the price of good and services retained by the community increases.

Because of these drawbacks, many buyers shy away from purchasing a condominium. Moreover, depending the condition of the real estate market, condos are often harder to sell then real estate owned by other methods such as Fee Simple.

As mentioned above, the elected Condo Association is responsible for the affairs of the community. This body typically meets monthly and has the authority to pass actions that impact all owners with regard to the amount of monthly dues, the community rules, etc. The members of the Condo Association are typically elected annually, although this can vary from community to community. Since management of the Condo Association is a democratic process, it has all the peculiarities of any political body. Therefore, most owners find it beneficial to attend all monthly meetings, so that their voices are heard.

The authority of the CA and other rules of a community are usually detailed in a document called the Covenants, Conditions and Restrictions (CCRs). Be sure that you and your legal representative review this document before buying a condominium, and consult a knowledgeable Real Estate agent to represent you throughout the buying process.