The Unexpected Costs of Buying a Condo

Is it time to start thinking about buying that condo you’ve always wanted for retirement, a vacation home or an investment?  Or, are you a first-time buyer who sees a condo as an entry point into homeownership?  Condos are a great investment!  They are typically low maintenance, offer numerous amenities and they are often located in prime locations.

While a condo may be the preferred real estate for many buyers, you should remember not to overlook the hidden costs associated with condo living.  Here are a few things you need to know.

HOA/Maintenance Dues 

Most condos will have a HomeOwners Association (HOA) that is responsible for replacing the roof, addressing siding issues, maintaining landscaping and even some will replace broken windows. However, these services come at a cost to the condo owner. Typically, a monthly, quarterly or annual fee will be charged each condo owner to cover these expenses along with any upkeep for amenities the association is responsible for maintaining such as a pool or tennis courts.

Some condo HOA dues also cover all or some of the utilities.  Many times, the water, sewer and garbage services for the units are paid by the condo association. Some will even cover electricity and internet service.  When Buyers look at the regular HOA dues, be sure there is a good understanding of what all is included. 

Special Assessments  

Special assessments are additional dues that are charged to cover expenses that aren’t considered routine maintenance or that are beyond what the standard dues can cover. These unexpected expenses are divided among the condo owners to cover unplanned expenses such as storm damage, new amenities, or projects to protect the health and safety of residents. When purchasing a condo, be aware of the current condition of the building itself, the amenities offered in the development and any future amenities that are planned for the community, to help determine if special assessments may be coming. 

Many Buyers considering purchasing a condo will include the ability to have a condo document review by an attorney as a contingency in the sale agreement.  There are law firms that specialize in working with condominium developments that will review the budget, reserve account and HOA documents and provide an assessment of the strength of the HOA in covering current expenses, future needs for improvements and unexpected repairs.   

Additional Insurance  

The condo’s HOA should provide insurance to cover the exterior of the building and any common areas in the condo community.  Homeowners are responsible for insuring the interior of their unit, any personal content inside the condo and liability.  We often hear the phrase ‘the owner is responsible from studs in, the HOA is responsible for the exterior’.  Sometimes this can be a little unclear such as if pipes break between the walls or there is mold in the attic.  Get clarification on who covers what areas of the home to ensure you have the proper insurance.

On-going Fees  

Many homeowners feel great when they can pay off their mortgage and reduce the monthly costs associated with living in their home. One thing about living in a condo is that you continue to pay the HOA fees long after you’ve paid off the condo itself.

Additional One-time Fees  

In more and more condominium developments, the HOA not only charges the regular dues but there may also be membership fees, a share of the realty tax on the land where your condo is built, move-in and move-out fees, transfer of ownership fees and sometimes parking fees if the parking space(s) are not deeded to your unit.  Ensure you ask about any additional fees which would generally be payable at the time of closing on the purchase. 

Knowing what to expect to pay for your condo is important.  Many condo owners are happy with the fees as it gives them 24-hour security, well-maintained swimming pools and other amenities, and a more carefree lifestyle than a single-family home. Condos can be an affordable way to own a vacation property, downsize during retirement or get into homeownership for first time buyers.  Doing your homework prior to purchasing a condo is important.

Hiring an experienced agent who has your best interests at heart is also important. Contact me if you or someone you know is thinking about making a move!