11 questions every condo buyer should ask

There are plenty of things to love about renting, including not having to mow a lawn, take out the trash or deal with month after month of snow buildup. But after a year (or ten) of paying your landlord’s mortgage, you may be wondering if you should make a move that may better benefit you in the long run.

A condo can be a perfect next step for a renter who wants to invest in their financial future without taking on the hassle of property maintenance. However, as you search for condos, you may wonder how you can decide on a specific condo unit — and feel confident about such a major life shift.

By asking these questions as you search for and buy a condo, you can ensure that the condo’s day-to-day upkeep and long-term future match your needs and expectations.

1. What is a condo? What makes it different from an apartment?

A condo is a privately-owned residential unit in what’s called a common interest community.  The boundaries of a condo unit extend to the walls, floors and ceilings and it is surrounded by other condo units along with jointly-owned community areas. While the tenant of an apartment is on a “lease” with an end date, a condo owner is the private owner of their individual unit.

Sometimes, people considering a condo may also be open to purchasing a loft or a townhome. Here’s the difference between condos, lofts and townhomes.

2. Who manages the building and common spaces?

If you plan to live in a shared space, like a condo, then you’ll soon get used to sharing the decision-making. Condo communities are governed by a homeowners’ association (HOA). As an owner, you are a member of the HOA. The HOA itself is run by a board of directors who are elected to their positions by the condo unit owners.

The HOA is responsible for collecting HOA fees and for determining how the fees will be used; they also determine and enforce the rules for both privately owned areas and common spaces.

3. What are the HOA fees and when are they charged?

This is one of the most important condo questions to consider. In order to pay for amenities and services like landscaping, plowing, general maintenance and future repairs, every HOA charges a monthly or annual fee.

While a typical HOA fee is between 25 cents and 75 cents per square foot per month, it’s important to keep in mind that luxury condos may charge significantly more — and smaller condominiums may charge a lot less, while still maintaining the property with great care.

It can be difficult for a first-time condo owner to assess if a building’s HOA fee is fair; your REALTOR® will offer insights on the typical HOA fee for your location and budget.

4. What do the HOA fees cover?

Typically, a HOA is responsible for all shared property outside of a condo owner’s unit. That means that the HOA may pay for general upkeep of common areas, including:

• Entry points and lobby
• Mail room
• Elevators or stairwells
• Parking lots or parking garages
• Amenities, including workout facilities, pools, tennis courts. etc.

Additionally, the HOA may pay for specific services on behalf of the condo owners, including:

• Waste management
• Water usage
• Landscaping
• Snow plowing

Last, the HOA will keep a “reserve” of the HOA fees to spend on larger, future projects, including siding or roofing, structural maintenance or unexpected emergencies.

5. Is the HOA considering raising the fees?

It’s acceptable to ask if the HOA is considering any plans to raise the HOA fees in the future and how much the anticipated raise will be. You can also ask if the HOA fees have gone up in the past and how much notice the condo owners were given of this change.

6. What percentage of owners are overdue on their HOA payments and how does the HOA handle delinquent payments?

HOA fees are collected from each condo owner, so you’ll want to ask if the HOA has any units with outstanding balances. While a few delinquent payments could simply be a sign of a problematic owner, a large number of late payments from various owners could indicate that the HOA doesn’t have much control over the condo community.

As a unit owner, you’ll want to be sure that you are paying your fair share — not the shares of other owners.

7. How much of the HOA’s budget is on “reserve” for future projects or unexpected maintenance?

If the HOA can plan for a needed repair in advance, they can use funds they have “on reserve.” This means you wouldn’t be expected to pay for a repair outright; the cost will come from the dues you already paid.

To plan ahead for such repairs, the HOA may commission a reserve study from a third-party professional. This study can determine both anticipated repairs that will be needed in the coming years and a schedule for how to complete those repairs over time (so the HOA fees can properly cover them).

When touring a condo, ask for the status of the complex’s reserve. If a condo complex does not have enough money to pay for a needed repair, they may ask for a special assessment.

Keep in mind that anticipated repairs will vary from one complex to the next and will depend on many factors, including the age of the complex, the condition of its components, and the history of the building.

8. What are the condo rules and regulations for community spaces and private units?

For the most part, you’ll be able to determine what you want to do with your privately-owned unit. That means that painting the walls purple or adding a new light fixture won’t need approval. However, the HOA may restrict you from a few things that affect your neighbors, even if they occur within your own private property.

Common restrictions include:

• Owning a pet
• Renting out your property
• Decorating your deck or balcony
• Keeping bicycles, grills or other large objects on your balcony
• Painting your front door or changing the lock hardware
• Hanging signs from within windows or from the balcony

9. Is there a parking spot included? Where is it?

Be sure to ask where the parking is and what type of spot will be given to you. If a condo appears to have indoor parking and outdoor parking, ask how you can obtain an indoor spot and if it costs more.

If only outdoor parking is available, ask about how snow plowing is handled during the winter months.

10. Are there any pending lawsuits?

Check to see whether the HOA is involved in a lawsuit or is considering starting one. There could be litigation over unpaid fees, the enforcement of rules, or structural issues with the building.

If an HOA is involved in a lawsuit, depending on the nature of the action, it could affect your ability to obtain financing for the unit. You may wish to consult with a loan officer about the effect of a particular lawsuit on financing.

You should also consider how a lawsuit might affect you as a unit owner. If the HOA has not budgeted for the attorney fees that will arise, that could result in a special assessment or a higher monthly fee. If the lawsuit concerns a physical problem with the complex and the HOA doesn’t prevail in getting a third party to address the issue, unit owners could also see an additional cost passed on to them.

Explore the nature of the lawsuit, when the HOA expects it to be completed, and the possibility of additional expenses for unit owners to make sure that you won’t have unexpected costs in the future.

11. How do I know if I can trust the info given to me about the for-sale condo?

This is an extraordinarily important question to ask when buying a condo. As you begin searching for condos, you can ask questions of the listing agent and find general information about the HOA fees and coverage within the online property details of each condo listing.

When it comes to verifying the information, especially as related to the above questions, the state of Minnesota protects potential condo owners through the Minnesota Common Interest Ownership Act (MCIOA). The MCIOA is a legal precedent stating that condo buyers must receive a packet of official information related to their purchase and the condo’s HOA after they have signed a purchase agreement but before they have closed on the condo.

The packet of information includes full details about:

• The HOA fee and how often it’s charged
• The current status of HOA budget
• The current costs and projects the HOA is taking on
• The responsibilities of the HOA vs. condo owner
• Any lawsuits the HOA may be involved in

Buyers have ten days to review the documentation and can cancel the purchase agreement if they find anything in the packet that leads them to believe it’s a bad investment or simply “not the right fit.”

To think of it another way, condo sellers (and their associated HOAs) must disclose information about the private unit and the jointly-owned community areas. While it isn’t to the advantage of the seller or the HOA to conceal information about the property (as it could lead to future litigation), the MCIOA takes the added step of protecting condo buyers through this official disclosure.

Key points and next steps

As a condo owner you’ll benefit from plenty of conveniences, ranging from general property upkeep to community fitness rooms to salted sidewalks in the winter. In order to ensure these services and amenities are worth the price you’ll pay for them, there are specific questions you should ask when buying a condo, including:

• Who manages the property?
• What fees does the HOA or condo board charge?
• How are the HOA fees used and how much is on reserve?
• What rules are there about my private unit or the use of common areas?
• What services and amenities are provided by the HOA?

Your Realtor can help you evaluate if the HOA fees are fair and how the association compares to others in terms of costs, services, and amenities. To get in touch with a condo expert in your desired area, reach out to Edina Realty’s customer care team.  

Additional resources to consider

Edina Realty: What’s the difference between condos, lofts and townhomes?
Edina Realty: Ask an Edina Realty Lawyer: How does buying a condo or townhouse differ from a traditional home?
Investopedia: The complete guide to buying a condo
Bankrate: Should I buy a condo?