7 Questions You Must Ask Before Buying A Condo

I came across this list today while doing some research for a great couple who is buying a condo. After the accepted offer we have encountered many little hiccups that are now adding up to agita!

So before we can continue I want them to ponder what SMART MONEY POSED: These 7 questions to avoid a sour mess...

YOU'VE FOUND YOUR DREAM CONDO, and you're ready to relax . Hold everything. To keep from getting stuck with a lemon, you've got to do some homework. Here are the seven most important questions you need to ask before buying a condo.

1. "What's the beef?" Take a look at the minutes of the condo association board meetings to see what the owners have been griping about. If everyone was complaining about the faulty plumbing or the gardener's absence, you know that the complex is having management difficulties. Even if there aren't any complaints, reading the minutes will reveal the sorts of projects that are under way at the complex -- projects the seller may have neglected to mention.
2. "Who's been naughty and who's been nice?" Find out the delinquency rates of present owners. If people aren't paying their association dues on time, that is either a sign of discontent or an indication that the association might be underfunded.

3. "How much is in the repair fund?" Ask if the community has done a reserve-fund review in the past five years. Lester Giese, the author of The 99 Best Residential & Recreational Communities in America, recommends the following formula: If the complex is one to 10 years old, the reserve fund should have 10% of the cost of replaceable items (roofs, roads, tennis courts, etc.). Between 10 and 20 years old, the repair fund should be at 25% to 30%. At 20 years, that amount should be 50% or above. Residents who brag that they don't pay much in maintenance may be in a complex that either is not being kept up well or is living beyond its means.

4. "Can you cover me?" If you look at nothing else, get a copy of the certificate of insurance, which is a summary of the association's policy. Then make sure that the policy has a building-ordinance clause, which means that the insurance will cover the cost of bringing the building up to code if there is any rebuilding to be done. Finally, make sure that you understand exactly what the association policy covers and what you are responsible for.

5. "Does the association present any legal problems?" With a condo, Contact a local real estate lawyer and have him or her go over the bylaws of the association. Do they make sense? Are they consistent with the state laws? Giese, the author, once found that the association bylaws of a large garden-style condo complex had been lifted from the books of a high-rise condo, leaving confused tenants with rules about shared hallway space and the correct use of garbage chutes. Benny Kass, a Washington real estate attorney, recommends that you also have your lawyer screen the association at the local courthouse, to see if any owners have filed suit against it.

6. "Is the complex renter-friendly?" If the renter population is over 10%, there should be clear rental policies. Keep one thing in mind, though: An association can change its bylaws to prohibit or restrict renting at any time. The more owners who rent, the less chance that will happen.

7. "Am I my community's keeper?" Watch out for a condo whose owners manage the place themselves. Although many are operated efficiently, self-management can lead to more hassles for owners -- especially those who live thousands of miles away. If you hook up with a bad manager, you can be sure of this: Your dream condo will keep you up at night.