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Condo Living

What is a condo?

A condominium, commonly referred to as a condo, is not a style of home, it is the form of ownership. A condo can be an apartment style residence, a townhome style (with a shared wall) a single family residence with it’s own yard, can also be a condo. It can be a unit above a storefront or business, it can be in a condo community with several buildings, it can be in a community where there are mixed styles of homes.

What makes condos different from non-condo homes? With a condo, you own your unit, however you also share a fractional ownership (and costs) of all the common areas, building(s) and land. So, if there are 100 condos in your community, you would own a 1/100th fractional ownership of all the other areas in the development. While you share the overall costs of keeping the community up-to-date, it’s the Board or Directors or property management company that makes all the financial decisions.

What are the positive aspects of owning a condo?

No maintenance. The biggest attraction is you don’t have to do any of the maintenance or building, or grounds upkeep. No lawncare, no snow shoveling, no exterior maintenance, no pool work, nothing other than your own interior maintenance. Your monthly condo fees handle all the rest!

Major costs are shared. By law, part of your condo fees go into a reserve fund. These funds are used to pay for any major repairs, like roofs, decks, paving the roads, taking care of the pool etc. If the current reserve funds aren’t enough to cover a major community project, then you’d be assessed 1/100th of the cost (assuming there are just 100 units) which gets spread out over time. This would be considered a special assessment, but the assessment is shared by all.

Lifestyle. Common areas like pools and recreation facilities offer great opportunities to socialize with your neighbors. Perhaps you’ve always wanted to have a swimming pool and clubhouse but didn’t want the associated costs. Some condo communities have workout facilities, shuffleboard, meeting spaces, sports courts, private beaches, boat docks, etc. Condo living is often a lifestyle choice.

Customization. You’re perfectly free to paint the walls, put up pictures, renovate, put down hardwood floors, etc. Since you own the inside of the condo, from floor to ceiling, wall to wall, you’re free to do most anything you’d like inside your own unit provided it does not affect the adjacent units.

Lower Costs. Many condos are more affordable than single family homes without the hassle and with lower insurance and utility costs

Location. Looking for a prime place to live in a city; condos might be a very practical option for you. Many condos have garages and easy highway access to get to and from work, dining, shopping, entertainment, and medical facilities.

Better Security. Some condo communities offer security guards, gated entries, key fobbed entries into common areas like pools, and entrance doorman. If you’re a frequent traveler, this might provide you peace of mind in your absence.

What are the not-so positive aspects of condo ownership?

All forms home ownership, including condos, have certain risks and limitations.

Price. Although most condos are less expensive than single family homes, many condos are located in highly desirable locations which can in turn drive the price a bit higher. Keep in mind, condo living doesn’t necessarily mean you have to downsize. Some condos can be extremely large especially if you’re considering a luxury condo.

Appreciation may not be as high. In most cases, you’ll see an appreciation of your investment, but depending on age, location, amenities etc, and the fact condo living is becoming so prevalent and more are being built, you may not realize the appreciation value you hoped for. A lot also depends on the financial strength of the condo community; how well they are managed, maintained and the upgrades of the overall community.

There are condo fees. Unlike a single family home out in the country, when you pay off the mortgage, your condo fee continues. After all, the community maintenance does not cease just because your individual unit is paid off. Additionally, the ever increasing costs of maintaining properties can lead to future assessments that the reserve fund can’t cover.

Those pesky special assessments. When your condo board goes over budget, the costs (based on fractional ownership) will be passed to you and your fellow condo owners. For example, if your community needs new paving, and the cost of it exceeds what’s in the reserve fund, then the owners will need to pony up the money to repave the streets.

You’re responsible for everything within your walls. Unlike renting, you can paint the walls, renovate, replace carpeting, add granite etc, but the interior maintenance like a broken washer, is on your dime since everything in your unit only serves you and not the neighbors. It’s very important when considering a condo, what is and what is not covered by your fees.

You may share the responsibility for other people’s bad behavior. Sharing costs are great, but if someone damages a common area, such as driving their auto through the greenspace and then your association is involved in a law-suit, you and your fellow owners could be on the hook for the costs involved.

There are bylaws and rules. Noise restrictions may be in place after a certain hour, pet rules, parking, trash disposal and outdoor fixtures (like satellite dishes) may be established by the condo corporation. These rules are in place to protect all the owners, but always knows these rules before you buy a condo and be sure you can live with them.

You are king (or queen) of your castle, and so is your neighbor. While you have complete authority with what you do inside your unit, you probably won’t have a say so when it comes to decisions like redecorating the lobby or what colors are used outside. And, it’s up to the Board of Directors or management company when any exterior work gets scheduled.

Special tips for first-timers

Get professional help. Choose a Realtor who is knowledgeable about condos and an attorney who has expertise and experience

Be sure to demand the resale documents before you buy. In Delaware, these documents are referred to as the Delaware Uniform Common Interest Owners Act, (DUCIOA.) These documents show the financial strength of the community, any special assessments coming up, how many unit owners live there, how many are behind in their condo fees, etc. Better to know up front! And your lender will want to see these as well.

Do your comparison homework. If condo fees will play an important role in affordability for you, comparison shop, and be sure you know what is and what is not covered by your condo fees.

Know the rules and by-laws. As mentioned before, you should know the rules and how they will be enforced. You don’t want any surprises after you move in. Be sure you know if you can rent your unit as many condo buyers do so with the hopes of using them to rent out.

Look beyond your own unit. Some questions you may want to ask include: Is the building well managed? Does it have a healthy reserve fund? What special assessments have been done in the past? What work needs to be done in the future? Your home inspector should look beyond your unit too. And look at how the community is maintained. Be sure the pool is clean, the roads are not in poor condition, the lawns are well manicured etc. These can be a clue as to the management of the community.

Get the proper insurance. The condo buildings are insured under the master umbrella policy of the community, but your individual unit is not covered. You need to have insurance that covers wall to wall, floor to ceiling as well as the contents. Be sure your insurance covers things like water damage if your washing machine leaks in the neighbor’s unit.

Consider volunteering on your Board of Directors. If you want a say in what happens, consider participating in your condo association’s Board of Directors — but keep in mind you only get one vote. Regardless, it’s a good idea to keep up with what’s going on and bring any concerns you might have to the board’s attention.

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