If you plan to buy a condo, you might have questions or concerns about the condominium association. It’s understandable when you’ve never purchased a condo before.
If you are already familiar with homeowners associations, the way condominium associations work will seem familiar though they are not identical.
We look at what you should know about condominium associations to know what to expect when you move into this type of property.
There are many questions to ask before purchasing a condo.
What is a condo?
A condo or condominium isn’t necessarily a set type of property. It can be different forms of real estate. While they are often considered units in a development similar to an apartment building, this needn’t be the case.
Condos can be single-family homes, townhouses, and even office buildings.
What makes a home a condominium is the ownership structure. Someone who owns a condominium owns their unit within the development, but they also share the ownership and responsibility for the common areas and amenities.
Is a condo association the same as a homeowners association?
With a homeowners association, the association itself owns and is responsible for the common areas. All owners of the homes within the HOA area are members of that association that owns the common areas.
A condominium association is different as homeowners own a percentage of the shared space. The condo association itself does not own anything.
How condominium associations work
Similar to an HOA, an elected board runs condo associations. The association is a non-profit corporation that uses governing documents, articles of incorporation, and bylaws to regulate the association’s operation.
Owners of the homes can volunteer to help run the association. A declaration of covenants should detail how board members can be elected to manage the development.
Generally, the rules and regulations used within condo associations are more detailed when compared to HOAs. Due to the shared ownership of the common areas, there can be more issues involving insurance, taxes, and more, that require more governing documents.
Do you have to pay fees to the condominium association?
When you own a condominium, like a home in an HOA, you have to pay fees to the association. The amount you will need to pay will largely depend on the amenities provided within the development and the location.
You can expect to contribute more money towards the association to maintain these facilities if there are more amenities, like a gym or a swimming pool.
The fees can also pay for building insurance and shared utilities. Some of the money might go to a fund for future building maintenance. If maintenance is required and the reserve isn’t large enough, it will be up to the condo owners to pay the bill.
Condominium association fees are typically higher than those from an HOA. This is because of the collective responsibility due to shared ownership of the development. The amount condo owners will pay varies depending on the percentage of ownership they have. This differs from an HOA, where owners divide costs equally.
Potential buyers should always research whether there are any upcoming special assessments. These fees could severely impact your finances.
Maintenance responsibilities
Who is responsible for what within a condominium development can be confusing. This confusion is due to the rules often being different between associations. To understand the maintenance requirements for a particular association, you need to check their governing documents.
In general, however, you can expect to be responsible for things that affect your unit when you own a condo. This might mean pipes, windows, HVAC systems, and appliances that are in or serve your condo being your responsibility.
The responsibility will fall upon the association for items and parts of the building that serve multiple units. This might mean they will be responsible for the roof, the grounds, the parking lot, and other communal areas or buildings.
Condo association insurance coverage
Once again, the exact coverage provided by condo associations will vary. Since they all have unique and differing policies, you will need to check their governing documents to find what they do and do not provide insurance for.
These governing documents also tell you how much coverage is available and clarify where you will need to pay for your insurance.
Final thoughts
When you’re interested in purchasing a condo, your buyer’s agent should assist with researching the condominium association, including collecting the condo docs and financial statements.
Due diligence is even more essential when buying a condo.
