Q: What do I need to know if I want to buy a condo? A: Buying a condo requires some unique research different than buying a house. First, you must understand that in a condo, you are buying not only your unit, but a share of the common areas. Common areas include the overall grounds and the common building elements like lobbies, hallways, roofs, etc. You'll want to know what you are buying and the financial status of the condos.
Once you have found a condo you like, you should ask for 4 things.
(1) First, the 'Declaration'. This is the official condo document that explains how the common area ownership is divided amongst individual unit owners and the general structure of the board and policies. The declaration is the most important document and no other documents can alter what is stated in the declaration. The declaration will state the exact requirements, but typically, changing the declaration is the most difficult change to make. Typically requiring an overwhelming majority vote (at Riverway it requires a two-thirds vote where a non vote is a vote in the negative) to change and requires filing the change with local government records agency.
(2) Next, there are the by-laws. The by-laws are typcially a subset of the Declaration written in a more friendly format. The by-laws can't alter the declaration, they just explain and possibly expand upon the declaration. The by-laws are more likely to change over time and not as difficult as the Declaration to alter. An owner vote is required to make changes to the by-laws.
(3) The third set of documents is the 'Rules & Regulations'. This is the smallest document and typically is a short list of those most common policies. In many condos, the board may make changes and vote into enforcement amongst themselves (as long as they don't violate the by-laws or the Declaration). Yes, this is a good reason to get involved and volunteer for the board :)
These first three documents will tell you a lot about the day to day life in the condos and help you understand what you are buying.
(4) The 4th request you should have is for current financial statements. Condos have 'common charges' that are assessed to each owner to maintain the common areas. This goes towards monthly expenses like water, sewage, waste disposal, land snow removal, common area electricity, housekeeping, etc. This also goes towards long term capital projects. For example, if the roof is a 30 year roof, the common charges will attempt to collect the funds now to prepare for that eventual expense in the future. It is important to look at the financial statements of a condo complex prior to purchase. Some condos are proactive and others are reactive. By being proactive and setting budgets for the long term, there is little need to ever enforce special assessments against the owners. The financial statements will tell you whether or not the condos have savings and are prepared for future events. Be very concerned if the savings are minimal, or even worse, negative with loan debt. If prior owners failed to plan, you may get hit with some big assessments and increases to common fees.