Lessons learned in a condo deal
Buying a condo includes some different challenges than buying a single-family house. There are condo fees, condo associations, special assessments, and condo association rules to consider. In an established condo association, it’s usually a pretty routine matter to nail down those items.
But what about buying in an old apartment building that is being converted into condos?
One reader who recently wrote to me stumbled onto some problems when he purchased a converted condo in Boston over the summer. One of the most frustrating problems he faced was the fact that a board of trustees had not yet been set up, so there were questions about who to contact about repairs and other building issues. The buyer dealt with the property owner’s lawyer during the sale process, and the property owner was going to act as the trustee until 60 percent of the units were sold. (By the way, this was the property owner’s first time developing this kind of project.)
At the closing, the buyer still had some relatively minor repairs he wanted taken care of inside his condo and in common areas of the building, including making sure the lobby door would be fixed so it would close properly and getting the driveway paved. He asked the seller’s attorney for contact information for the seller at the close, and was promised that information. So he decided to go through with the closing, figuring these were minor issues that could easily be resolved. Eventually the buyer was given a post office box address to contact the seller and pay his monthly condo fees.
This proved to be a less than successful way to get repairs taken care of, and so the buyer pushed for more information. This time, he got contact information for a handyman and was asked not contact the seller’s attorney any more.
Relieved to get a handyman’s information, the buyer called him up, but was surprised to find the handyman didn’t really know anything about the property owner and he expected to be paid up front for any repairs.
This further frustrated the buyer.
Now in October, after a lot of legwork, the buyer has finally gotten many of his repair items addressed, but said he has learned some valuable lessons. Here’s what the buyer wrote to me:
“Looking back, I wish we had held off on the closing. That would have pushed the seller to resolve these issues ASAP. We gave him the benefit that everything would be done. However, not one issue was addressed without a number of phone calls and emails.
“If you could get two points across to your readers, one is to try avoid buying a condo where the board is not already in place. I would never do it again. The second point would be not to make any compromises at closing that make you feel uncomfortable.
“We covered all of our bases, but still really had no control. Things were done on his timeframe, not ours.”
Tomorrow, I plan to expand on this post a bit by writing about a few of the resources I found for condo buyers. In the meantime, what lessons have other condo buyers learned in the purchase process? What advice would you give someone interested in buying a condo? Would you buy a condo if the board of trustees wasn’t in place yet?
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i seem to have the same problem in a converted 3 family to a 3 unit condo. the association happens to have been just the lady that i bought from. pitty me that i never had the chance to have it inspected as i was in and out of hotels till i was able to move in this place. now she tells me that anything and everything that needs work on that its my problem not hers. well, i moved in this way and am extremely sorry i had done so. got taken big time money wise and will have to take a huge hit once i try and sell it. i had put money into it as there is nothing moderenized and whatever is there is mine. if only i have one chance on this i would take it and get into a 55+ place over at charlestown waterfront.
Please stop the boring postings........Ugh there is so much happening and you waste time on this........
Pick something intersting or controversial or funny.
If I want to watch paint dry I can well.....watch paint dry
One of the things that was forgotten in the real estate rush of the last ten years was:
NEVER, EVER BUY A PIECE OF REAL ESTATE WITHOUT BEING REPRESENTED BY AN ATTORNEY.
I'm not a lawyer but a broker who has, over 20+ years, ALWAYS recommended to buyers that they need a lawyer at the closing. If they can't afford the money for the lawyer, they shouldn't be closing in the first place. If the lawyer doesn't do his/her job, (rare), you still have recourse with the Board of Bar Overseers or the AG.
Hi Stacey,
I hope this note finds you doing well and enjoying your new residence.
I think this is an all to common situation for many buyers. I believe that your attorney (not the closing attorney, necessarily) or your buyers agent should of advised you about a hold-back at the closing. Keeping back some of the sellers money in an escrow account is a great way to see the work done correctly and in a timely fashion.
A large portion of mortgage lenders won't allow escrow holdbacks though, so that's not always a viable option.
I purchased a condo on the North Shore 3 years ago, and the developer acts as the trustee for the first 5 years. But even with a board in place (it's only the 2 principals plus their attorney), we have had a very hard time getting them to do anything. We had to hire an attorney just to get them to hold an annual owner's meeting and disclose the financials, even though they are obligated to do so under the terms of the condominium trust. It is frustrating because as trustees, they hold all the cards. So even with a board in place, there can be challenges!
DO NOT EVER buy a condo. It is the biggest mistake I have ever made. Once somebody is in as an owner - you cannot just throw them out like in an apartment. The jerk upstairs from me never pays fees, moved in a woman with two very, very noisy children and then blessed her with another bundle of joy. She is a lovely woman was indicted for defrauding HUD of over 250K. In a small condo where every fee counts, deadbeats become a legal nightmare and a constant source of disruption. I would run if I could, but this economy has me stuck. If I can ever escape - it's a small single family home for me!
What lovely comments.
In fact, this is exactly the type of information buyers crave, so thank you for posting it. Buyers want to know what types of problems they may encounter.
As you say, buying a condo is different from buying a single-family residence, for exactly the reasons you mention. And, buying in a big condo development is different from buying in a small condo development.
It's all well and good to say, "don't buy in a three-decker", but in some Boston neighborhoods, that's all that exists. You have to.
Thank you, Stacey.
I've lived exclusively in condos for a decade now.
When I bought my first condo, it was in a small association (8 units). Nightmare!
The owners of the 3 largest condos in the association were an average of 3 months late on fees, which drove the association to the edge especially in winter when the fuel bills were high (heating was part of association fees). Because of these 3 jerks, our association racked up interest and late fees on nearly everything.
I now live in a large condo association (over 75 units) and am very happy - it's well-run for the most part, and solvent.. I will never - EVER - buy into a small association again.
I just learned from my neice in Chicago this latest condo nightmare. She bought a condo in a small building (4, three bedroom units). The owners in one of the units defaulted on the mortagage and moved out, taking the stainless steel kitchen appliances among other things. It is hard enough to put any property back on the market at this time but now this unit is missing thousands of dollars of appliances and cabinetry. Anyone heard of this happening before? And if so, what did you do?
Bigger is better.........there is absolutely no way I would advise anyone to buy into a 3 unit condo. All it takes is one meatball to ruin the experience. Then it turns into living hell. Unfortunately today the attitude is "it all about me" with absolutely no consideration for your neighbor.
have lived in a 40 unit complex for 14 years. Has been pretty decent. Most if not all people pay their fees. In a small complex, like 3 or 4 units, all it takes is one person not to pay their fee and the rest of the people have to make up the difference, including all legal costs to go after the deadbeat. In a larger complex, the deadbeat can get lost in the shuffle of things and the building can still be managed well until the idiot pays up. I, for one, like to pay 3 months in advance because it gives the association money up front to do what they need. And you may sleep better to know your fee is paid in advance for a while. A 3 unit building must be managed 100% correctly or you will pay dearly. Get it for as cheap as possible!! Resale can be a problem!!
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