Introduction
While condos are a familiar concept to many buyers, the intricate legal documents and financial statements from homeowners' associations (HOAs) involved in the purchase process often aren't as well understood. This guide is crafted to help buyers navigate through these disclosures efficiently, ensuring they grasp the essential details for an informed decision.
Space Allocations and Restrictions
Check if your space allocations, like parking and storage, are permanent or if they could be altered by decisions made by the owner or the HOA board. Remember, spaces designated for your exclusive use are usually permanent.
Ensure there's a clear map showing your designated parking, storage, and external areas. It should be clear enough for you to identify the exact boundaries of these spaces. Also, verify if your parking space is easily accessible, regardless of how others park. If not, check for a key-sharing system that’s easy to manage.
Understand which parts of the building you're responsible for and which parts are managed by the community. Even if a space is exclusively yours, maintenance might still be a collective responsibility.
If you're planning to renovate or add to your space, look for any requirements or prerequisites you need to meet according to the condominium documents.
Find out what noise control measures are in place, like rules on floor coverings, and what you can request from your neighbors (and what they can request from you).
Confirm if pets are allowed and understand any restrictions on their presence in outdoor areas.
Review any restrictions on leasing your condo.
Repair and Replacement Reserves
Confirm that there's a reserve fund for repairs and replacements included in the budget. It should be based on accurate, methodical assessments.
Check that this reserve fund is kept in a separate bank account and aligns with the building's inspection reports.
Owner Contributions
Make sure all current owners are up-to-date on their dues. Look for consistency in the payment history in recent bank statements.
Management
There should be a clear management system for the condo's finances and the upkeep of shared spaces, ensuring someone is always responsible for these tasks.
If there's a governing board, know which decisions are left to the owners and which require a majority or unanimous vote.
When reviewing records of owner meetings, check for the last meeting date and the decisions made.
Look into the schedule for fines and penalties, understanding what actions could trigger these costs.
Lender Requirements
Lenders often review the CC&Rs, Bylaws, and Articles of Incorporation. If any of these documents are missing, due to the HOA being unincorporated or other reasons, an attorney’s letter might be accepted as a substitute.
Lender standards can vary widely. A rejection from one lender doesn't mean another won't approve. This applies to FHA, Fannie Mae, or Freddie Mac guidelines too, as interpretations can vary with different underwriters.
Looking to buy a condo in the San Ramon Valley? Let Emre Turanalp guide you to avoid surprises and achieve your goals with clarity and ease.
