Real Estate — Condominium Law
Buying a condo is not like buying a house. You’re not just purchasing four walls — you’re joining a community with its own rules, finances, and governance structure. Doing your homework before you close can save you from expensive surprises down the road.
1. Review the Governing Documents Carefully
Before buying, you should receive and review the association’s governing documents — the Declaration of Condominium, Bylaws, and Rules and Regulations. These tell you everything about what you can and cannot do with your unit, how the association operates, and what your financial obligations will be. Pay particular attention to rules about pets, rentals, parking, renovations, and noise. Have a real estate attorney review them — not just a quick skim.
2. Examine the Association’s Finances
This is one of the most important — and most overlooked — steps. Request and review:
- The current budget — is income covering expenses or is the association running a deficit?
- The reserve fund balance — is there enough money set aside for major future repairs?
- Any pending or recent special assessments — you could inherit these after closing
- The delinquency rate — a high rate of unpaid fees signals financial trouble
- Any pending litigation — lawsuits can be expensive and affect your resale value
An underfunded reserve is a red flag. It means future repairs — roof, elevators, plumbing — will likely be paid through special assessments charged to all owners including you.
3. Read the Meeting Minutes
Board meeting minutes from the past one to two years are a goldmine of information. They reveal ongoing disputes, upcoming assessments, maintenance issues, neighbor conflicts, and how the board operates. Sellers and agents don’t always volunteer this information — ask for it specifically.
4. Understand What the HOA Fee Covers
HOA fees vary enormously. Find out exactly what yours covers — building insurance, water, trash, amenities, exterior maintenance, landscaping, concierge services? What does it not cover? You need the full picture to calculate your true monthly housing cost. Also ask how often fees have increased in recent years and whether an increase is anticipated.
5. Check the Rental and Resale Rules
If you ever plan to rent your unit or sell it, you need to know the rules now. Some associations cap the percentage of units that can be rented, require board approval of tenants, impose minimum lease terms, or have a right of first refusal on sales. Strict rental restrictions can also make your unit harder to finance with certain loan types — including FHA and VA loans.
6. Get a Condo Inspection
A standard home inspection is still essential for a condo. Have the inspector focus on the interior of your unit — HVAC, plumbing, electrical, windows, and any appliances included in the sale. While you can’t inspect the entire building, ask the association about the condition and age of major building systems like the roof, elevators, and boilers.
7. Verify the Building’s Insurance Coverage
The association carries a master insurance policy covering the building and common areas. But the scope varies — some policies cover only the bare structure while others cover fixtures and improvements inside units. Know exactly where the association’s coverage ends and where your personal condo insurance (HO-6 policy) needs to begin.
8. Confirm Financing Eligibility
Not all condos are eligible for all types of financing. FHA and VA loans have strict requirements for condo buildings — including minimum owner-occupancy rates and limits on commercial space. If you’re using one of these loan types, verify early that the building is approved. A non-warrantable condo can significantly limit your financing options and future resale market.
9. Talk to Current Residents
If possible, introduce yourself to a few residents before closing. Ask what they like and don’t like about living there. You’ll often learn more in a five-minute hallway conversation than from any document.
Key Takeaways
- Read the governing documents — all of them — before signing anything
- Review the association’s finances, reserve fund, and any pending assessments
- Read at least two years of board meeting minutes
- Know exactly what your HOA fee covers and how often it increases
- Check rental and resale restrictions before you buy
- Verify the building qualifies for your loan type
- Have a real estate attorney review all documents before closing
Disclaimer: The information on LegalConsultants.com is provided for general informational purposes only and does not constitute legal advice. Always consult a qualified attorney for advice specific to your situation.