When you search on “condo horror stories,” you won’t come up short.
Condominiums practically ask to create problems. Often the boards have less experience than a high school student council. There’s more regulation for a college fraternity.
Yet for many people, a condo represents the purchase of a lifetime. The only way to protect your purchase is to ask the right questions before you buy. Once you’re in, you’re at the mercy of the board. Unless you’re a lawyer, or have the funds to pay a lawyer, there’s little you can do. Renters have far more protection in most jurisdictions.
Surprise expenses may await.
Condos can demand unexpected “assessments.” Condo boards can fine their owners for things that seem incredibly petty; occasionally they’ll impose fines for non-existent rules and you’ll have to go to Small Claims Court or hire a lawyer to recover. The board and/or manager can be rude and dismissive, occasionally crossing the line into verbal abuse. It’s difficult and expensive to fight the system.
One couple just moved into their unit when they got a notice: Your window coverings are the wrong shade of white. We’re fining you $150 a day till you fix them.
As it turned out, this couple consisted of two attorneys. One brisk letter with the magic “JD” initials and the threats miraculously disappeared.
Some people simply give up on condo purchases altogether. But many people find happiness in their buildings and live in the same place for ten or twenty years.
I’m not a real estate agent or a lawyer, but I’ve had experience with buying and selling, and with good and bad condos. Nothing is 100% guaranteed but you can greatly reduce your odds of a bad experience by making a few moves before you sign the contract.
(1) Choose a real estate agent who sells a lot of condos in the city you’re exploring.
If you can’t get a referral, find an agency in your city that has sold many condos. Ask for an agent who’s been in the business for at least 5 years. Interview at least 3 agents.
This may seem harsh but it’s nothing compared to dealing with a problem down the road.
Don’t be shy. Ask, “How many condos did you list in the last year? How many did you sell? Have you ever lived in one? What advice would you give someone who wants to buy a condo?”
Don’t even consider an agent who’s not a Realtor — someone who’s accountable to the Real Estate Board of your city.
Don’t choose an agent who feels like a friend. Keep everything strictly business. If your agent makes a big mistake (and even the good ones do sometimes) you’ll need to ask for. compensation. That’s harder with a friend.
When you interview the agents, explain that yes, you want a nice looking condo. You might have preferences for noise or amenities.
But more importantly, you want a well-managed building. If the agent says, “I can’t help you,” find another agent.
As a test, ask the agent, “Given my concerns, are there some buildings where you would not show me property or advise me not to buy?” Listen carefully. If they’re surprised by the question or become evasive, time for a new agent.
For the ultimate test, ask the agent, “What are the management companies with the best reputations in this city?” Keep asking around. You’ll eventually get the names of three or four companies.
Your management company will make a huge difference in the quality of your life. I would refuse to consider buying into a condo that did not have a management company as opposed to an individual or small partnership. I’d want a company with separate departments for accounting, finance, management, accounts receivable, and so on.
Your agent can give you a list of the condos they’ll be showing you. It’s not hard for them to find out the names of the management companies. When you google those companies, you may have a surprise. A search of one condo will turn up several comments about the rudeness of the property manager.
The management of your condo can make life hell. A bad board will tolerate — or even encourage — a bad manager. A bad manager can even influence the election of a bad board.
This is the single most important step you can take.
Top management companies won’t deal with bad boards. They won’t run around looking for imaginary ways to fine the owners. They will refuse to assess charges that are blatantly illegal. They won’t stick charges onto your accounts receivable ledger just because you pissed them off.
They’ll be professional. Not perfect…but professional. You’ll avoid a lot of nepotism and conflicts of interest.
Finally, ask the agent if s/he’s represented a seller from that unit. Ideally they’ve represented several. Sellers confide in their agents. They’ll tell their agent what they liked or didn’t like.
Of course, your agent doesn’t have to be your sole source of information. Before buying my current place, I talked to people in my classes at the gym, in my coworking space, and at my networking events. They had no qualms about saying things like, “We had a really bad management company and now we have X.” They would say, “We have a good board. The president is a lawyer.” Or, “They’re really strict about the pet policy.”
(2) Arrange to get a copy of the rules before you make an offer.
Don’t let the agent tell you that’s impossible. The current condo owner has access to the rules and bylaws. If they really want to sell, they’ll send them to you.
A condo that’s rule-heavy will create a prison-like environment. But if they’re too lax, they’re liable to get fined for fire code violations or become so sloppy nobody will want to buy.
Look for 3 things in the rules.
(a) Be wary of condos with a heavy emphasis on aesthetics with corresponding heavy fines. Every condo has some concerns about things like window treatments. But it doesn’t have to be ridiculous.
(b) Be concerned about pet restrictions. One pet per unit? No pets at all? They’re probably going to be uptight about everything else. If they’re “cats only” or restrict dog breeds, dig deeper into the community vibe. Some communities are strict about pets but lenient about most other things.
( c) Do they have restrictions on short-term rentals? If you actually plan to live in your unit, that’s a good thing. Without these restrictions, you’ll be living in a hotel without a manager. Unless you plan to rent your unit as an AirBnB, you should not buy into a place where these rentals are allowed.
(3) Ask how communications take place among the board, manager, and community.
One well-managed condo has a quarterly newsletter from the board. Many others have private Facebook groups. Some invite owners to attend all the meetings. Some have special meetings with owners to discuss specific topics.
What’s important is that you see some regular communication going on. I’m not sure who said, “Sunshine is the best disinfectant.” But you need that sunshine.
If the board hides from the owners, you have to ask, “Why are they hiding?” Secretive boards are dangerous.
If they’re drowning in complaints, they’re not communicating effectively. That’s not an excuse.
(4) Notice the condition of the property.
The hallways should be not just clean but bright and up to date — and not too institutional. You might ask how the building decides on things like colors of rugs and door decorations. Maybe you don’t care, but it’s a sign of how the community operates.
One condo amended the rules so that door decorations (such as Christmas wreaths) had to be approved by the manager, who had “sole authority” to decide if these decorations were acceptable. Anyone who took the trouble to read the rules should have decided not to buy, and told the seller’s agent why. You also have to wonder what kind of management company would volunteer for this role.
(5) Ask point blank, “How many assessments has this property had in the last 5 years?”
In one building the board kept the dues low. But they demanded assessments nearly every year, amounting to 30–40% of the dues.
Assessments will happen when an unexpected repair becomes necessary and urgent. Frequent assessments tell you the board isn’t paying attention…and the management company should be suspect as well. Good boards have reserve studies done on a regular basis.
Finally, if you’re spending a lot of money and/or you want to live there a long time, hire a lawyer to review the paperwork before you sign. Make that a contingency of your offer. Choose a lawyer who regularly works with condos in your city — not someone who just helped with your will. Ask if anything jumps out at them or if they see red flags.
Additionally, you will have a relationship with a lawyer. If the condo association gets unreasonable, often just one strong letter from an attorney will make the problem go away. It’s expensive, but it’s cheaper than moving.
Condo communities change over time.
Generally, the management company outlasts multiple boards, unless they’re caught embezzling. That’s rare, but it happens.
More often a one-person management company develops a close relationship with a supplier, which doesn’t always work in your favor. Or the manager starts to think of the building as her property and treating the owners like children. That’s almost impossible with a large, multi-department management company.
Just a few simple questions can save you years of hassle…
…and thousands of dollars in moving and legal fees. Just make sure you’re not taken in by a beautiful pool and a cute kitchen. You won’t be able to enjoy them if you’re constantly fighting with the board and/or the management company.