Purchasing a Condominium
Posted on 5th Apr 2016
Condominium purchases are ideal for those buyers who want to have a stake in property ownership but, for any number of reasons, do not want to own a single-family home. Perhaps the price of single-family homes is prohibitive, or home maintenance might pose a difficulty. Condominium owners own their individual units outright. Thus, owners are responsible for the internal maintenance of their units, but they have a right to use the areas owned in common. They pay fees that go toward the maintenance of the building. They also pay for other expenses, such as the hiring of janitors, doormen, and additional staff. Fees for insurance, garbage disposal, and sewage costs might be included as well. In larger developments, owners elect the members of the condominium board, who determine policy and manage the building. These boards are answerable to the owners by holding regular owners' meetings and reporting on developments.
One key benefit of condominium ownership is that owners can rent or sell their units as they please without needing to obtain prior approval from the condominium board. Prior to purchasing a unit, though, it is important that prospective buyers do their homework. Condominium ownership is complicated, in part because the expenses that are incurred are different from those paid by homeowners.
Information on New York State's Condominium Act can be found in Real Property Law Article 9-B. The condominium laws apply to new developments as well as to existing buildings that were converted.
The New York State Attorney General's Office offers guidance to prospective buyers and owners of condominium units. The Attorney General highly recommends that a prospective purchaser read the entire offering plan and consult with an attorney BEFORE signing a purchase agreement. The purchase of a unit in a cooperative or condominium has many significant legal and financial consequences.
Prospective buyers should review the founding documents that enabled the condominium's existence. They should look at any by-laws. In addition, they should develop a sense of the condominium's financial health and review any financial reports.
Furthermore, there are a number of pertinent questions that a prospective buyer should ask, such as: What are the common areas? Are there any condominium fees? If there are any fees, what do they cover, and when are they payable? Is the building in good shape? Does the condominium board anticipate any major repairs to the exterior of the building? If so, when? Will the fees be increased as a result? Are there any minutes from the board's meetings or from any meetings with the owners? Is the board doing a good job at supervising maintenance?
With respect to the actual unit being considered, an inspection of the property should be conducted in order to determine whether the property is in good condition. Finally, prospective buyers should know whether unit owners are charged property taxes by the municipality.