What to research before buying in a multi-family community

But they come with additional considerations beyond what’s included when purchasing a single-family home. Here are the top five items to research in advance:

1. Understand exactly what you are buying when you make an offer, as the word “condo” refers to a legal form of ownership, not a particular type of property. Condo buyers generally own only the interior space of their homes; the exterior structure, land and amenities are usually owned collectively by all of the owners in the complex. Be sure to ask who owns the interior walls? What about the land beneath the home? What maintenance are you responsible for? Do you have your own parking? How many and what kind of vehicles can you park?

2. Research the homeowner’s association—and its board members. Ask for a copy of the association’s financials, including a certified budget and the latest annual reserve study; this can help you determine whether any fee increases are imminent. How is the association organized, and who runs it? How are voting percentages determined, and what would be your percentage?

3. Be aware of all related fees, including monthly association fees any special assessments. How are association fees charged and is there a limit on increases? Check whether utility charges and amenities are included, including pool maintenance. Also, be clear about what maintenance is included in the association fee, and what the condo owner must maintain.

4. Review the complex’s declaration, which helps you determine the monthly condo fee; the bylaws, which include items such as architectural requirements should you want to make any external changes to your condo; plats and plans; and rules and regulations. If the condo association is incorporated, your real estate attorney will want to review the articles of incorporation as well as any proffered disclosure documents. Also, have your attorney check for any “use restrictions” that might prohibit you from renting out the unit, which some associations include to protect financing and refinancing options.

5. Ask about the ratio of units that are rented versus owner-occupied. Your lender will likely require this information.

Condo ownership can be an attractive homeownership option for many buyers. But, it’s important that buyers do their research about the legal and financial implications before making an offer, in order to feel confident when getting to the closing table.

“What to research before buying in a multi-family community” is part of NRT’s podcast series.  To hear this podcast or another podcast focused on home buying, please click here.