St. Louis Real Estate Tip of the Week: Complexities of Condo Buying & What You Should Know

Selecting a knowledgeable Realtor when purchasing a condominium is very important especially for understand the intricacies of associations.  The experienced Relator can assist in the review of their bylaws, minutes, budgets and CC & R’s. 

A buyer must work to determine the stability of the home owners association because of its impact on your investment. Example key issues include delinquencies by the current owners, litigation (if any), artificially low dues that will likely rise due to underfunded reserves.

Condo purchasing decisions should consider many different issues to avoid unwanted problems.   Let me help you become an informed condo buyer!

Tips you MUST know BEFORE you buy!

Issue #1.) Maintenance:  Don’t assume the association handles everything, it may not.  I recommend you get the facts on the maintenance responsibilities, so you can adequately budget for them.  Home inspectors inspect the unit itself.  So, as a buyer it’s important to inspect the common areas for maintenance in order to assess the quality of the homeowners association maintenance. Look for peeling paint, trees overgrown, lawns not groomed, clogged gutters and cracked sidewalks.  Poor maintenance means you might expect stagnant property values and perhaps special assessments in the future.

Issue #2.) Association Reserves:  Does the association have healthy reserves so it can repair large ticket items?  If not, you may experience future special assessments. Reserves in the 70% to 100% funding range are excellent. Reserves below 50%, mean probable future assessments. The lower the reserves, the more imminent the special assessment.

Issue #3.) Property Insurance: How much insurance coverage does the association have?  If it’s bare minimum coverage, you face a higher risk of a future special assessment in the event a claim is filed against the association.

Issue #4.) Litigation:  Ask the current seller about litigation over the past ten years. Also ask to review the past two years of minutes to see if the minutes reflect any past litigation.  If the association has had ongoing litigation with members, you may not want to buy into this condo group.

Issue #5.) Rental Caution:  Inquire about the percentage of rentals in the development.  A high rental population can create problems for rules enforcement, maintenance and oversight of the property.  If the rentals are nearing or exceeding 15%, be cautious.  If they exceed 30% there may be a problem with getting loans approved on the community.

Issue #6.) Pet Policies:  Does the association have any restrictions on pets? Do the bylaws limit the amount of pets per unit?  Will there be barking dogs at all hours of the day and night.  Plus, are there pet areas for dog walking and do residents pick up after their dogs? The higher the fee for non-compliance, the better.

Issue #7.) Parking Alottment:  Is there sufficient resident and guest parking in the development? If not, it may create problems for you and your guests. I suggest that you visit the property on weekends when everyone is at home and determine if there are enough spaces for all residents and visitors.

Issue #8.) Noise Control:  I suggest asking about plumbing noise, crying babies, loud stereos and TV’s, etc. from surrounding units.  If there is an above unit, ask if there are hardwood floors because they cause noise. Try to determine the quality of construction, so you might know if the walls are thick enough to mask any noise from the unit that shares common walls.

Issue #9.) Finances & Dues:  Ask for a copy of the budget and annual financial statement, read them and analyze them.  Ask about delinquencies.  Also, ask about past dues increases.  If there have been no dues increases, it may mean that there is much deferred maintenance on the property.  It could also mean that increases may be coming in the very near future.

Issue #10.) Sales Activity:  If there are numerous units for sale within an association, it’s important to find out why?  Perhaps, there is a reason why so many owners desire to sell, is it an issue with the complex itself? If there are many short sales and foreclosures in the complex, this may cause the values to drop for several years.

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Beverly Taki is a Missouri-licensed real estate broker who has successfully represented clients for 25 years.  She is a broker salesperson at Keller Williams Realty St Louis. 10936 Manchester Road, St. Louis, MO   63122. Beverly has earned a certificate in dispute resolution from Pepperdine University, specializing in negotiation and mediation. Taki can be reached at beverlytaki@kw.com or 314-677-6366.  Her website is beverlytakistlouis.com. Her blog is www.realestatestlou.com.