When you buy a condo or coop, you join on association of owners that
determines everything from which flowers to plant in the courtyard to
how financing will be acquired for repairs and improvements. Once the
seller and yourself have agreed to a price, but before you sign the
contract of sale, contact the board with the following questions:
1. What percentage of units are owner occupied? What percentage are
tenant occupied? Generally, the higher the percentage of owner-occupied units,
the more marketable the units will be at re-sale.
2. What covenants, bylaws, and restrictions govern the property? Are
there any grandfather clauses, i.e., are some owners allowed to have pets, but
buyers who purchased after a certain date cannot? Ask for a copy of the bylaws
and review them.
3. How much money does the association keep in reserve? How is that
money being invested? Are the financial reserves keeping pace with the annual
rate of inflation? Smart boards raise common charges or maintenance fees a
certain percentage each year, building reserves to fund future repairs.
4. What does the "Common Charge" or "Maintenance Fee" cover - and
what is not covered? (Snow Removal, Trash Removal, Lobby and
Other Common Areas, Pool and Gym Facilities) When comparing different
buildings and management companies, keep in mind the differences in staffing
and daily maintenance between developments that have differing amenties, i.e.,
does your building have a pool? Is there a 24-hour doorman or other
on-premises security? A building with one hundred units will generally have an
on-site superintendant and staff, but a development of less than two dozen
townhouses will likely have only a part-time groundskeeper.
5. For Condos: What special assessments have been mandated in the
past five years? Financing repairs through special assessments is a standard
practice, but repeated, expensive increases in the homeowner's expenses could
be a red flag about the condition of the building or the board's fiscal policy.
6. For Coops: If the building has a mortgage, what is the interest rate
and terms? What portion of the monthly maintenance fee is tax deductable?
What, if any, is the "flip tax" imposed by the coop board and payable by the buyer
to the board at the time of sale?
7. Is the project in litigation? If the builders or homeowners are involved in
a lawsuit, reserves can be depleted quickly.
Final note: Remember to be polite. You are about to join a community
of homeowners and neighbors, all of whom are individuals with distinct
personalities. A spirit of cooperation is the key to living in harmony, and
first impressions count!
All the best,
Terry Woods
contact me at 516/650-1131 or terry @
terrywoods.com
7 Questions for the Coop or Condo Board
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Terry Woods is a former Real Estate Professional.
These articles are for information purposes only.
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