Yesterday, a report released by Genworth claimed that condo prices are bound to rise in 2013 due to expected demand. Whether as a starter home for first-time home buyers, a down-sizing option for retirees or as an investment rental property, condominiums are still an attractive purchase to many. However, purchasing a condo is different then buying a house. These are some considerations to take in to account when thinking of buying a condo:
What exactly do you own? When it comes to ownership, what are your property rights when buying a condo? What you are purchasing and owning is the dwelling unit: the interior space inside the condo building. All other aspects are owned jointly with the other unit purchasers such as: the building walls, facilities, surrounding land, etc. The purchase agreement will clearly outline what your property rights are when it comes to extras such as the locker, parking space, or balcony.
Board of Directors: If you are a fan of the old TV show
Frasier, you might be familiar with the importance of being in good with your condo board. Buildings are usually “governed” by elected condo owners who act as board members that make the decisions in how the building is run. These are the people who decide, for example, if you can have a satellite hanging off your balcony. So it’s a good idea to learn about the board and perhaps even be involved yourself. After all, it is your own home that is affected!
Status Certificate: The status certificate is a document that contains important information such as: the condo rules, regulations and bylaws, the declaration, as well as building info like what its monthly expenses are, if and how much reserve funds it has and pending legal actions, etc. – which can affect the future condo fees. Know how the building runs and what rules may affect you – ask your real estate lawyer for full clarification on the document. You may want to consider title insurance, which would cover an unexpected major structural building repair, which you hadn’t calculated when figuring out your purchasing costs.
Buying a New Development: Buying a pre-build can offer a lot of savings and an immediate payback in investments but unexpected issues may also arise. There may be no issue with the possession date but what about other areas of the building still under construction such as the amenities or will there be more phases? How would you feel about two or more buildings sharing the amenities in the near future? What happens if you want to live in the unit before the condo is registered?
What are your rights and what are the fees if you or a tenant lives in the unit from the period of the interim closing until the final closing?
Keep in mind too that if you are buying based on a plan, what you expect may not be what the finished product is – check the contract! As well, the size of the model unit does not have to be reflective of the actual square footage you’re getting – bring a measuring tape when viewing the model.
As with anything in life, knowing truly is half the battle.
