There are a few extra things you need to do before purchasing a condominium. Home ownership comes in different packages and your lifestyle will help you decide what type is best for you.
A condo can look like a single family home, a manufactured home, a town-home, a cottage home, a walk-up apartment or a high-rise. A condo plan usually means that the land around he buildings are common area and are maintained by the owners cooperatively either directly through a condo board or a property manager. Decisions regarding snow removal, roof repairs and general maintenance on the exteriors are made by the elected boards. If you own one unit you have a vote and you can also put your name forward to serve on the board.
Your lifestyle might include lots of travel and a condo lets you leave without having to worry about snow removal, garbage removal and lawn maintenance. Or you might simply want a smaller place with less maintenance.
All condos in Alberta are required to do a reserve fund study every 5 years. This is a report completed by condominium experts (building engineers, contractors etc) to determine the state of repair of the condos roof, heating systems, drainage, siding etc.
They determine if the required reserve fund is adequate to cover any major or minor upcoming maintenance.
When you are looking to purchase a condo, you should always be allowed to review the reserve fund study report plus a number of other items that will give you a history of what the owners are reporting.
When looking you should ask to review...
- a copy of the registered condominium plan
- a copy of the current bylaws of the corporation
- a copy of the most recent financial statements, if any, of the corporation
- a copy of the budget of the corporation
- A statement setting out the monthly contributions (condo fees) and the basis on which that amount was determined
- A copy of any minutes of the proceedings of a general meeting of the corporation or of the board for the past 12 months
- a copy of any special resolutions, if any
- a copy of the insurance certificate
- a copy of any lease agreement or exclusive use agreement with respect to the possession of a portion of the common property, including a parking stall or storage unit
- the particulars of, or a copy of, any subsisting management agreement
- the particulars of, or a copy of, any subsisting recreational agreement
- a statement setting out structural deficiencies the the corporation has knowledge of at the time of the request in any of the buildings that are included in the condo plan
- a statement setting out the amount of the capital replacement reserve fund
- a copy of the most recent reserve fund report
- a copy of the most recent reserve fund plan
- the particulars of any post tensioned cables located anywhere on or anywhere within the property
- a statement setting out the amount of contributions due and payable in respect to a unit
- the particulars of any action commenced against the corporation and served on the corporation
- the particulars of an unsatisfied judgment or order for which the corporation is liable
- the particulars of any written demand made on the corporation for an amount in excess of $5000 that, if not met, may result in an action being brought against the corporation
While not all these documents will be applicable these are all items to consider before purchasing your new home.
Take the time to read these through or have your real estate associate review them for you. This is the due diligence process that may save you some future shock of a special assessment amount levied against you for major repairs. This is a major reason for utilizing the service of a Realtor. They do not charge you a commission as your buying associate, so you have nothing to loose. Your second line of defense is your mortgage broker, who will also ask for these items to provide to the lender. If there is anything of concern that is read from the checklist, they will alert you before you remove that financing condition from your offer to purchase.
Recently I ran across a reasonably priced document review service. It was started by a person who was faced with two consecutive "special Assessments". The service will review the entire condominium document package (usually a large bunch of papers that require nerves of steel to stay focused while you are reading). Sometimes the lending underwriter will insist on reviewing the documents or expect that the lawyer closing the file will review them. If the lawyer is expected to review them, they will most likely have a significant increase in their fees or they will send it out to a similar contract service provider. If you are lucky enough to have a lawyer in the family, they can also be called upon to help you understand the condo docs.
When you are given the condo documents, as required by the real estate act and if you make the condo purchase without properly review this document, if you receive a special assessment, you alone are responsible.
Once you are into your condo, there is no turning back. So make sure your condominium home ownership experience is enjoyable.
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