If you are thinking about buying a condominium, it is absolutely essential that you place the following condition on any and every purchase contract: ‘Subject to the Buyer’s satisfactory review of the Condominium Documents by such and such a date.’ The Alberta Real Estate Association contract provides an ‘Appendix’ which specifies those documents. While the list may not apply to every condominium, the majority will! Ensure that the current seller provides you with a COMPLETE SET of documents to review! If you feel uncomfortable in reviewing these documents yourself, there are lawyers and individuals who, for a set fee, will do this professionally. Surely, you want to make a wise investment upfront and avoid the catastrophic ‘Surprise! Surprise!’ scenario down the road.
For example, in your due diligence you will want answers to the following questions before you purchase a condominium [understanding that this is not an exhaustive list]:
1. What are my initial impressions of the condo complex? Is it well-maintained? Lawns cut? Litter-free? Attractive to the eye? Show ‘pride of ownership?
2. Can I live within the current bylaws? Are there age or pet restrictions that might impact me?
3. How many parking stalls come with the unit? Are they titled or assigned?
4. Is the condominium a ‘conventional’ type or a ‘bareland’ [I own some land] type?
5. What is the current ‘reserve fund’ amount? Is the amount sufficient to address all of the maintenance and repair work specified in the Reserve Fund Study? Or, will the monthly condo fees increase in the near future? If so, by how much and when? Has a ‘Special Levy’ been levied against each unit in the complex or is it being considered? [If it is already been assessed, ensure that there is written agreement that the current owner will pay it out in full on or before possession date].
6. What is the percentage of owners versus renters?
7. Is the complex self-managed or professionally managed? If the latter, what is the name of the professional management company? Further, what is the name of the person in that management company responsible for this complex? [I suggest that any potential buyer contact this person, as part of their due diligence, and ask them, 'Do you have any reservations whatsoever, in recommending this complex to me? Will the condo fees be increased in the next twelve months? What are the major challenges facing the complex in the next year?'
8. What do you learn from reading the monthly condo board meetings for the past year? the last annual general meeting? Do you sense any red flags?
9. After a careful reading of the 'Reserve Fund Study', do you have any questions in your mind that demand answers? Or, can you move confidently forward in your decision?
10. What has been the re-sale history in the complex over the past year? How long have the individual units sat on the market before a sale? Are the prices increasing or decreasing? Does the lack of a sales history indicate a stability among the current owners?
As a further step, you may want to visit the complex and chat with some of the current owners to garner their perspective. You could ask them questions like: 'How long have you lived here? Are you considering a move in the near future? What do you like and dislike about the complex? Are there any problems of which I should be aware?'
If after doing a lot of personal research [The condition of condo doc review should give you a time-span of five working days], you decide to proceed with the purchase, there is one more piece of advice I have regarding condo documents–KEEP EVERY DOCUMENT. Place the package you received from the last owner in a separate file. Then add to it as more documents come your way: monthly condo board meeting minutes, annual general meeting minutes, annual financial report, and so forth.
By being a ‘hoarder’ of every written piece of information pertaining to your unit, you will spare yourself a bill from the management company for missing documents if you ever decide to sell your condo unit! That bill can amount to hundreds of dollars [$500 or more is not uncommon!].
Condominium living may well suit your lifestyle options. Care taken in advance of a purchase together with diligence while living there [Why not allow your name to stand for nomination to the condo board and thereby gain the inside track on the affairs of the complex of which you are a part-owner?] will allow for piece of mind and general enjoyment!
