Before you buy a condominium, get answers to the following. It could save you time, money and hassles.
1. What percentage of units are owner-occupied? What percentage is rented? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
2. What covenants, bylaws, and restrictions govern the condominium property? What grandfather clauses are in place? Ask for a “Status Certificate” (in Ontario) and review the bylaws to determine if those are acceptable to you. Have your lawyer check the “Status Certificate” and seek his legal opinion..
3. How much does the Condominium Corporation keep in reserve fund? How is that money being invested?
4. Are Condominium Corporation assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs.To determine if the assessment is reasonable, compare the rate to others in the area.
5. What does and doesn’t the Maintenance fees cover-common area maintenance, recreational facilities, trash collection, snow removal?
6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.
7. How much turnover occurs in the building? On average, how many units are for sale at one time.
8. Is the project in any litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.
9. Is the developer reputable? Find out what other projects the developer has built and enquire residents about their perceptions. If the property is Old, find out if engineering study has been conducted lately to assess the condition of the whole development. If the property is in bad repair, it could become a big financial liability.
10. Are multiple Condominium Corporations involved in the property? In very large developments, umbrella Condominium Corporations, as well as the smaller Condominium Corporation into which you’re buying, may require separate assessments.
11. What constitutes “common areas” of the condominium corporation. Who else shares the common areas? Do they pay for it and how is that calculated.
12. Who manages the Condominium Corporation? If it is an outside management company, how long is their contract? A long term contract with an ill management could spell trouble for the unit owners.
13. What are the resale prices and how the subject condominium prices have performed vis a vis other projects and the overall market.
14. How long does it take to sell a property in the complex?