It is said that the purchase of a condominium is one of the most complex types of real estate transactions. It’s best to be prepared!
If buying a property is a stressful endeavour requiring extensive research, this stress can be doubled in the case of condos. Why? Because this option requires far more verifications than would a single-family home. Professionals like a notary or a real estate broker can help you clarify things, but if you want to investigate on your own, here are a few leads to get you started.
What Is the Syndicate of Co-Owners?
Did you know that condominium buildings are managed by a syndicate that represents all the owners? It is formed to administer the building and make sure, among other things, that it does not decrease in value. It therefore plays an essential role! In this way, the building is run like a small business. You are duty-bound to attend meetings (during which co-owners make management decisions) and pay the shared costs every month. You may participate more actively if you like by joining the syndicate’s board of directors. Understand that this is mostly done on a voluntary basis. The syndicate may also be managed by an outside employee paid by all co-owners. Find out first!
What Are the Building’s By-Laws?
When you become the owner of a unit, you also become the co-owner of a building. Consequently, you cannot do as you please; there are rules to follow that you may not like. These by-laws are included in the declaration of co-ownership, which is a notarized contract that you may consult at all times and which you must sign upon purchase. It may be forbidden to have a pet, install an air conditioning unit in a window, make noise after 10 p.m., have a barbecue, leave you boots in the hallway, move a wall, etc. It might be a very lengthy list! And don’t think you can bypass the rules without consequences: you risk being sued by the syndicate or a co-owner. The point is that living in a condo is not for everyone.
How High Are the Monthly Fees?
Electricity for the common areas, painting, landscaping, insurance, having the carpets cleaned, pool products and maintenance fees, etc. … maintaining a building is expensive! In fact, the more services a building offers, the higher the condo fees. Before buying, it would be best to obtain this information to see if you have enough room in your budget. It can sometimes be an impressive sum! Be aware that these fees can increase as a result of unexpected expenses.
Does the unit you are visiting come with surprisingly low fees? Don’t be so quick to jump for joy: this may be a symptom of bad management or poor maintenance. Be vigilant.
Are the Financial Statements Sound?
Before committing yourself, make sure you have been given up-to-date documents proving that the building’s finances are in good order. Looking through these papers, try to answer the following questions: are invoices paid on time? is one of the co-owners not paying their condo fees? is the insurance up to date? is the building in debt?
There must also be sufficient resources in the contingency fund. It is not enough to just cover the monthly bills: saving is essential! This fund will not only be used to take care of unexpected expenses, but also to pay for major renovations in the future, like new roofing. A building that is the red is bad news and you’re better off looking elsewhere.
Renos, Repairs and Major Headaches!
Just like when buying a house, it is important to identify all the major renovations that have been carried out over the years and what work will have to be done in the coming ones: elevators, garage doors, balconies, paving, etc. Must these components be repaired or completely renovated? If so, how much will it cost? And crucially, could the syndicate’s contingency fund cover these expenses? If this is not the case, the bill will have to be split between all the co-owners, which can be a major source of frustration! To find out more and get the facts, you can consult the minutes of the last syndicate meeting.
For more judicious advice, you can trust your RE/MAX broker!!