Purchasing a previously owned condo
When you buy a previously owned condo, you are not protected by the disclosure and trust provisions of the Condominium Property Act. It is up to you to get the necessary documents and information. You may want to seek legal advice.
Condo Buyer Beware!
Be sure you have answers to these questions before you buy:
- What is the history of the development?
- For example, are there any persistent problems with the plumbing or other utilities?
- If you are buying from a developer, what work remains to be be done on the condo development?
- Do you have an assurance that it will be completed by a certain date?
- Is there an operating surplus or deficit?
- Do you have a recently-audited financial statement, a current budget, and evidence of adequate insurance coverage?
- Does the common property appear to be well-maintained and managed?
- Have any transactions taken place affecting the common property such as transfers, leases, or redivision of the units?
- Are the recreational facilities owned by the unit owners as common property, or are they leased by the condominium corporation?
- If they are owned, are they used by anyone besides the unit owners?
- If they are leased, what are the terms?
- Are there enough units to support the cost of repairs and maintenance of common areas?
- How many of the units are unoccupied? Rented?
- Are you personally responsible for any maintenance duties?
- Are there any restriction in the bylaws?
Counting up the condo costs
You'll pay a yearly or monthly condominium fee. This money is used for administration costs and for the maintenance, repair, and replacement of common property. Fees are set by the board, based on budgeted needs and your unit factor. Most condominium fees must be paid monthly. If you are purchasing a new unit, make sure that the current condo fee is stated in your purchase agreement. Be aware that condominium fees can and do go up!
Ask About the Reserve Fund
What happens when a condo needs a new roof or other major repairs on common property?
The condominium corporation should have a reserve fund to meet such expenses. A reserve fund is especially important if you are buying an older unit or a former rental property. (Condominium corporations created after May 16, 1978, may be required by their bylaws to have a capital replacement reserve fund.)
Find out the answers to the following questions before you buy:
- How much money is in the reserve fund?
- How much of the condo fee goes to the reserve fund?
- What major expenses, if any, are being considered?
- Are the projected replacement costs adequate?
- Were projected replacement costs calculated by a professional?