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What You Didn't Know About a Condo
What You Didn't Know About a Condo
A condo is not a type of home; it’s a type of ownership.
You can look at a building and not know whether it’s privately owned or a condo. Even though two buildings beside each other can look the same, they may not be a condo. It’s not a type of building.
How Condo Ownership Works
Inside the walls of your condo unit, you own everything. You are responsible for everything inside that.
Outside the walls, like the hallways and elevators, the unit owners in the building have joint ownership of those.
The buildings you should be concerned about for condominium ownership are old with elevators.
Those will have an $850 to $1200 condo fee.
How the Condo Sale Works
The moment a buyer’s offer on a condo for sale is accepted, if the building has a condominium association or property owners’ association, the seller’s agent will deliver the resale disclosure to the buyer’s agent to be delivered to the buyer.
What is the Resale Disclosure?
The resale disclosure is a document that provides all the special assessments of the building, which may influence a buyer’s decision to purchase.
The disclosure typically covers various aspects of the property, including its physical condition, history of repairs or renovations, known defects, and other relevant information.
Structural issues
Mechanical systems
Previous repairs or renovations
Water and moisture issues
Pest infestations
Environmental hazards
Reserve account or fund
Condo Association rules and regulations
A good agent can help you look at that and decipher and explain it to you.
Why Some Condo Buildings Don’t Qualify for a Loan
There are various reasons why you won’t qualify for a loan. Sometimes it’s not your financial means but the condo building that is the issue. In this case, there are three common reasons:
The reserve fund needs to be higher.
Without a sufficient reserve fund, the building will likely incur huge costs or even debt if the facility needs significant repair.
There are more investors than unit owners.
Banks don’t like this situation because tenants will not likely take care of the property as an owner would. There’s a specific ratio that banks look at and would be comfortable with.
There are a significant number of owners who need to catch up on their condo dues.
Owners who don’t pay their condo dues will affect the reserve fund. Banks likely won’t back the loan in this case.
If you want to buy a condo in Northern Virginia, Washington DC, or Maryland, call me at (703) 346-2776 or at Dan@greetingsvirginia.com.
