When I decided to buy a home in 2016, I had no desire to maintain a lawn or shovel snow. So, I set my sights on a condominium, where someone else would take care of those things (for a fee). Here are five things I’ve learned that condo buyers should do to protect themselves:
1. Look carefully at the reserve fund. Does it seem reasonable in relation to the property’s size? Are there upcoming projects or assessments (repairs to roofs, parking lots, pools)? Large fees can affect resale by making it harder for buyers to secure a mortgage since lenders factor in those fees, says Melvin A. Vieira Jr., president of the Greater Boston Association of Realtors and an agent with RE/MAX Destiny. Keep in mind, Vieira adds, that complex maintenance histories and plans are facing tougher scrutiny from Fannie Mae and Freddie Mac after the Surfside, Florida, condo collapse – which could affect a buyer’s ability to obtain conventional financing.
2. Understand how property insurance works. Otherwise, you could pay out of pocket for repairs you thought were the responsibility of the homeowners’ association, or HOA, like if a laundry room flood ruins your floors. The HOA pays for a master policy through condo fees, and unit owners pay for individual policies (HO6 policies cover owners who live in their units; landlord policies cover those who rent them out). Know your association’s “per unit” deductible, and confirm that your HO6 will cover it, says Becky McLaughlin, a senior vice president with insurance brokerage HUB International New England. (In my HOA, which McLaughlin advises, the master policy doesn’t kick in until the damage exceeds $25,000, which she says is standard.) It’s a good idea to “get the governing documents for the association that spell out who’s responsible for what,” and show them to your insurance agent, she adds.
3. Check your unit’s coverage for “loss of use,” which pays for alternate housing if you’re displaced. HO6 policies include some coverage for additional living expenses based on your coverage for replacing personal property. But “we do live in an expensive area,” so you should consider bumping up that amount, McLaughlin says. Last spring, there was a fire in my complex that uprooted folks from 36 units. Unfortunately, some owners had limited coverage and are struggling nearly a year later to pay for temporary housing while also keeping up mortgage payments.
4. Be aware of building connections. Even if they have separate addresses, buildings that are attached may share electrical, water, and fire alarm services. So, a fire in one “building” could knock out utilities throughout the structure. At my complex, one of the three connected buildings escaped fire damage, but its residents were displaced for about three months until the utilities were restored.
5. Once you move in, introduce yourself to neighbors — and exchange cellphone numbers. Those numbers come in handy if there’s a problem such as a hot water heater bursting while someone is on vacation. But it’s not always bad news. A neighbor once texted me to let me know I had a flower delivery waiting on my doorstep.