S0, what's a condo?
A condominium is a community where a person has individual ownership of a
unit and a tenant in common ownership of the common elements." That's
according to the Community Associations Institute (CAI) in Alexandria (www.caionline.org).
When you buy a condo, therefore, you're purchasing the actual unit - or
even more precisely, the inside of the unit. On the other hand, when you buy
a co-op, says CAI, a separate corporation holds the actual title to your
unit and common areas - and a special lease gives you exclusive fights of
occupancy of your unit.
Because condo owners only purchase their actual unit, the common areas
such as the lobby and hallways are the responsibility of the association.
For their own unit, the condo owners can expect to pay their mortgage,
utilities fees, homeowners insurance and a condo fee, which covers building
maintenance, upkeep of the common areas, and other expenses.
Jim Vaughn, a home inspections expert, says that utilities may be
considered a common element or metered individually, depending upon the
building or association. For example, water is almost always a common
element, and in many buildings gas for cooking is considered common. If
fellow owners or tenants don't take care of leaky plumbing, everyone in the
condo pays for it. Similarly, if some people cook a lot, those who don't are
subsidizing gas use of the cookers. Electricity, on the other hand, is often
individually metered.
A management company typically maintains the common areas of a
condominium. If you've ever lived in an apartment building, then you're
already familiar with this type of arrangement. Everything from changing
light bulbs in the lobby to conducting yearly elevator inspections is
handled by the management company. The fee charged by the management company
generally comes out of the condo fee.
Sometimes, however, larger expenditures arise - a leaky roof, for
instance - which forces the association to levy a special assessment on the
owners that requires extra monthly payments to repay the money borrowed to
complete the repairs. Unfortunately, this can be pretty expensive.
When you consider buying a condominium, be sure to ask your realtor about
the important condominium documents. These documents can give you important
insights into the community you're thinking about joining. The association's
bylaws, for instance, describe the condominium's rules for operation. The
house rules will let you know whether you can or can't bathe nude by the
swimming pool (among other things). Read the house rules carefully and don't
expect that some rules can be "bent." If it says "no dogs," it means no
dogs.
The purchase agreement describes your purchase and whether there is a
cooling-off period during which time you may decide to change your mind
about buying. Other important documents you may want to review include the
association's current operating budget, current and proposed assessments,
and any financial statements.
"One of the biggest drawbacks to condo ownership" according to Vaughn is
that a lot of condo buildings don't experience a great deal of appreciation.
"That's not to say that all condos would be money losers - some are
moneymakers," says Vaughn, "but most seem to appreciate very gradually. If
you're looking to make a quick fortune in the real estate market, I wouldn't
advise buying a condo."
Real estate agent Julianne Wasche outlined several items she felt were
worth noting about condo living. Among them are the low maintenance fees,
which cover most of the exterior repairs (any repair work required inside
your unit is your responsibility); personal security ("Someone is less
likely to break into a home on the tenth floor of a condo building than he
would a house left unlocked."); and affordability (because of the surge in
the DC real estate market. this is less true than it used to be).
Also of note is power: "Many buyers who are in dead-end jobs that are
lacking in any decision-making opportunities tend to find that their
despotism instincts are satisfied by being officers on the condominium
board. Wielding power over the hapless occupants of the building gives them
a level of satisfaction that is lacking in their postal worker
responsibilities."
Finally, my research and sources indicate that condos can be easier to
buy and sell than co-ops; required down payments are generally less and
finding financing can be easier; condo boards usually provide quicker
approval with less restrictions than co-ops; and once you buy a condo you
can usually lease it out to someone else if you like (often not the case
with co-ops).
