Whether you are a first-time home buyer or are ready to downsize in your twilight years, purchasing a condominium is a fantastic option for many perspective homeowners. Even as an investment or rental property, condos are a good choice because there is not much upkeep and maintenance, plus shared amenities for the community.
A condo is a single unit within multiple units, like a townhome or apartment-type building. It could be part of different building types comprising of multiple units, like a high rise, or a smaller building with two or three units. However, there are legal requirements, restrictions, and other regulations that come with a condo that makes it different from other homes:
- Letter of intent (LOI): Before making an offer on a condo, a letter of intent is a signed document given by you, the buyer, to the seller of the condo, essentially stating the terms and conditions of your purchase. This letter will contain the price you are paying for the condo, and signing it means that you agree to buy the condo from the seller. Remember, it is not an offer, and you still have to present that to the realtor or broker.
- Reservation application: A reservation application informs the buyer what type of unit is available and how much it costs. There may be other details, like maintenance fees or tax rates, as well as the seller’s promise to remove the unit from the market.
- Contract to sell: The contract to sell is essentially a legal document that contains the agreement between the buyer and seller; the seller agrees to sell the condo to the buyer, and the buyer agrees to buy the property. The buyer also agrees to sales provisions within the contract. The contract to sell also contains certain rights and responsibilities of the buyer, as well as how much to pay at closing and when payments are due.
- Tax declaration: A tax declaration is a government document that declares the amount of tax-exempt land you own. It determines how much the buyer needs to pay in taxes each year. The condo owner would then request a tax declaration from the City Assessor’s office to begin paying all tax obligations.
It is important to understand that when purchasing a condo, you have to carefully consider your future budget. This is because condos come with particular finance issues that could throw off your monthly budget. You must consider maintenance costs, HOA fees, as well as property or school taxes. Although condos are normally cheaper than a single-family home, they do come with their own costs you must consider.
When looking to finance your condo, you have to consider how the banks and mortgage lenders approach condo purchases. Lenders consider your credit score and payment history when you consider a condo purchase, and they look at the value of the condo development before approving a mortgage.
Furthermore, consider what your family preferences are before purchasing a condo. It is similar to living in an apartment, where you may not have a lot of outdoor space to enjoy. There are also common areas for the entire development, like pools, club houses, and fitness areas. There is not much privacy when living in a condo, so you should consider how you and your family may feel about that as well.
However, there are many perks of owning a condo, particularly their amenities. There are sometimes a community pool, a gym for everyone to use, and sometimes even game rooms or concierge services. Some families may find that the benefits of owning a condo outweigh the negatives.
Another benefit for owning a condo to consider is low maintenance. Rarely would you have to do outdoor maintenance tasks, like mowing the lawn or clearing your gutters, as the condo association likely has a crew to do that. However, if you like to do those maintenance activities, you may want to go with another option.
Tips for Purchasing a Condo
Some other helpful tips for purchasing a condo:
- Realtor: It is always best to have a reputable realtor on your side whenever making a home purchase, but it is particularly important when purchasing a condo. You want your realtor to have you and your family’s best interests in mind. There may be community finance issues and or infrastructure problems. A realtor would know about future resale values, and they could also take you to the development and look at the condo itself. You can check out the community for yourself.
- Amenities: Your realtor could also help you decide what amenities are right for you, as some condo associations do not offer what others may. When you purchase a condo, you purchase the unit itself, so do not be afraid to look for what you really want. Furthermore, if you do decide to resell someday, the amenities can make or break your condo’s value, so even if you do not use the amenities, they certainly will help your condo’s resale value.
- FHA-approved: Obtaining a mortgage for a condo may be a bit more difficult than other properties, mainly because the condo development itself will come into question. When getting financing for your condo, make sure it is condo-friendly and right for your purchase. The Federal Housing Administration (FHA) has a list of approved condos for purchase in your area. If the condo you are looking at is not FHA-approved, you may not be able to get a conventional loan either since conventional lenders have similar requirements.
- Property management company: Find out who the property management company is, and see if they have a good reputation because it is a good idea to know who will be caring for your property. Find out who is also in charge of day-to-day operations, so you know who to go to in case an issue arises.
- Association fees and regulations: Be sure to review the fees you are going to be paying that are included in your condo ownership. Find out what is included in those fees and if there are items you need to take care of on your own that they do not, such as a maintenance item.
- Lawyer: Purchasing a property can be a difficult endeavor, as many real estate transactions come with complex legal issues. Having a knowledgeable lawyer during this process will also be beneficial.
Towson Real Estate Lawyers at Huesman, Jones & Miles, LLC Help Perspective Homeowners With Condo Issues
If you need legal help with a condo purchase, contact one of our Towson real estate lawyers at Huesman, Jones & Miles, LLC. Call us at 443-589-0150 or fill out our online form for a free consultation. Located in Hunt Valley and Towson, Maryland, we proudly serve clients in Baltimore, Baltimore County, Bel Air, Bentley Springs, Columbia, Freeland, Hereford, Hampton, Westminster, Essex, Monkton, Sparks Glencoe, Parkton, Phoenix, Pikesville, White Hall, Carroll County, Harford County, and Howard County.