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Wednesday, January 8, 2003 What buyers should know about condominiums
People buy condominiums for a variety of reasons, including affordability, location, building services, security and professional management. Here are some factors that condo buyers should consider: 1. What are the most important criteria in purchasing a condominium? Location, building services, "air," "light" and "space" are the top aesthetic criteria, according to Neil Binder, a principal of Bellmarc Companies, a residential brokerage and management company in New York City. His definition of air, light and space encompasses a dynamic floor plan, a feeling of openness, a desirable view and the size of the unit's main living areas. 2. What are the most important financial criteria? Binder suggests weighing the total monthly cost of ownership, rather than the price of the condo unit. In addition to mortgage payments, condominium owners are responsible for property taxes, insurance, monthly maintenance or homeowners association fees and any special assessments. "One ingredient is the amount of cash you'll need to buy the home and the other ingredient is how much you'll need [each month] to [own] it. Don't be deceived by a low price with high maintenance charges," he warns. 3. What are the pros and cons of condominium living? A condominium can be attractive and affordable, yet buyers should understand the drawbacks. "One of the great attributes of a condominium is that you don't have to mow the lawn or fix the [building's] plumbing," Binder said. "However, people are [living] in close quarters, and the people living next to you will be able to sell or rent their unit without your input. There is a degree of uncertainty about your neighbors." 4. What are CC&Rs? Homeowners association governing documents and rules go by different names in different parts of the country. Examples include "covenants, conditions and restrictions" (CC&Rs), "bylaws," "the master deed," "the rules and regulations" or "the house rules." Condominium buyers should thoroughly read and digest the governing documents and rules that are binding on all the owners. Co-op buyers should inquire about "right of first refusal," which may give the board the right to evaluate prospective owners and acquire a for-sale unit in their shoes if they are deemed unacceptable. 5. Who pays for the insurance? An owner's financial interests should be protected by two insurance policies. The homeowners association policy should cover the structure of the building, the common areas and liability for any injuries that occur in the common areas. The owner's policy should cover his or her personal property and liability for any injuries that occur inside his or her unit. Always consult an insurance professional for advice about your personal situation.
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