Buying a Condo? Here’s How to Evaluate the Association and Its Board

Why it’s so important for homebuyers to investigate an association before purchasing a condominium

When you’re looking into purchasing a condo, you’re not just buying a single unit. You are also purchasing the right to become part of an association that works to protect, maintain, and improve the building, the parking lot, and the shared areas. Thus, when looking into a property, you should also evaluate the community that you are buying into and make sure it’s a good fit. Here’s how:

Review the financial health of the association

While the view, closet space, and parking lot might be ideal, you’ll want to be wary of falling in love with a unit before you have determined if the association is financially stable. Request and review the association’s budget, declaration, bylaws, rules, and statements of capital expenditures, and its financial condition for the last fiscal year. Be sure to look for whether or not there is money going into a reserve fund and what fees are allocated where. If the amount allocated for legal fees is high, this might be an indication of future trouble.

Inspect the reserve study

The reserve study will tell you what capital projects will be coming up within the next ten years, allowing you to decide if these are things that you agree would benefit the community. Look at the balances of both the reserve fund and the operating fund and make sure the numbers are positive and reasonably allocated. An upcoming project may also indicate a future hike in association fees, so be sure to ask about and budget for that possibility.

Ask to attend a board meeting

Rules, reports, and numbers can only give you so much information. How you’ll really be able to determine if the association and its board are a good fit for you is to get a taste for the process. Request to attend a board meeting before making an offer on the condo and pay attention to the following:

• Is there an agenda that is followed? Is the schedule met with efficiency or is the board coming off too lenient or too strong for your liking?
• Is a particular individual dominating the board?
• Does the meeting follow an agenda? Is the schedule met with efficiency or is the board coming off too lenient or too strong for your liking?
• Is a particular individual dominating the board?
• Are there productive, healthy discussions, or do members seem angry or disengaged?
• Is there an opportunity for an open forum during which residents can address their concerns?
• How does the board treat the views of the residents?
• Is the board competent? Do they seem prepared?

Understand the insurance master policy

The insurance master policy will explain exactly what the association’s insurance covers. It should include a reasonable amount of property and liability insurance, however, you might want to have your insurance agent review the information to determine if you would need additional coverage.

If you don’t have the time, know-how, or desire to review these documents in depth, consider consulting an attorney, CPA, or real estate industry professional to check out the documents and walk you through what you need to know. This process can be very time-consuming and seem overwhelming, which is why it’s incredibly helpful to have expert assistance.

If you’re planning on purchasing a condominium in the Southwest Florida area, let Dante Disabato help you find the right home and association for your individual needs. His years of experience tell him what to look for when it comes to associations and their bylaws so buyers don’t have to go it alone. Contact us at 239-537-5351 or through our online contact form to get started on your search today.