Condominiums offer a world of convenience for potential owners due to their reputation for low maintenance, affordability, and a glorious lack of yard work. But buying a condo is still a major investment, and it’s always best to do your due diligence before signing the final paperwork.
You should also ask yourself if the condo lifestyle is right for you. In a competitive market, they can be easier to buy than a single-family home. But they can also be more difficult to sell and don’t offer as much privacy as a house.
Forewarned is forearmed. Here is some crucial information to keep in mind regarding condo HOAs, what they’re responsible for repairing and maintaining, and what costs you’ll be expected to absorb.
Read the Fine Print
You might think it’s simple — you’re the one paying for the cost of repairing anything inside your home, and the association pays for the upkeep or replacement of anything outside and shared by all of the residents, referred to as the community’s “common elements.”
Unfortunately, it’s not always that clear-cut, and disagreements can lead to heavy costs, neighborly animosity, or even legal proceedings. In the course of your research, you’ll probably come across many “nightmare HOA” stories.
Like with purchasing a traditional house, it’s always smart to get a thorough inspection of a condo to ensure you’re making the right decision. A licensed professional inspector will perform an exhaustive visual inspection of the unit’s interior, which could reveal clues that the building might have deeper structural issues.
You should also ask plenty of questions about the community’s Home Owner Association (HOA), its rules and regulations, and what exactly is and is not covered by your HOA fees. If possible, attend an association meeting and speak with current residents about their experiences. In Illinois, your real estate attorney will ask for recent meeting minutes, and you should give them a review.
Know Your Terms
As part of the condo unit selling process in Illinois, the unit owner will give the potential buyer a 22.1 Disclosure (This refers to section 22.1 of the Illinois Condominium Property Act.) The buyer should also ask for the governing documents of the condominium’s highly-localized mini-government, otherwise known as the Board of Directors, or in some cases, the Board of Managers, or simply “The Board.”
Every unit owner automatically becomes a member of the homeowner’s association. Under the Illinois Condominium Property Act, both the unit owner and the HOA have specific rights and duties. Any current unit owner has the right to inspect and make a copy of the board’s governing documents, as well as land surveys, articles of incorporation, 7 years’ worth of meeting minutes, all current insurance policies, and all of the financial bookkeeping for the past 10 years. While the association has to release these records within thirty days, the member might have to pay costs related to retrieving, copying, or delivery.
You’ll also want to carefully review the Declaration of Covenants, Conditions, and Restrictions (CC&R) and the Rules and Regulations (yes, they are often two different documents). These outline all the things you could face hefty fines for, like making too much noise or letting your pet run amok. Be on the lookout for overly vague wording — this can expose you to penalties if someone on the Board decides you’re breaking one of the HOA laws.
The condo owner is legally obligated to pay their association fees in a timely manner. HOA fees might be due on a yearly, quarterly, or monthly basis. These funds provide for the maintenance of the common elements of the residential community, like the parking area, roofing, walkways, HVAC systems, or landscape features.
In the declaration documents, the potential buyer of a condo will find a detailed description of all the unit’s aspects and amenities, including the limited common elements.
These are aspects of the complex that are part of a particular unit, or assigned to the condo owner (e.g. a parking space or external storage locker), but considered to be the domain of the association and not the condo owner. Your declaration documents will detail these features, but they can include:
- Outer doors
- Balconies and terraces
- Amenities like clubhouses, swimming pools, and boat slips
When your agreed-upon HOA fees are not enough to cover urgently needed or unexpected repairs, the Board may call for a special assessment. This is an additional payment you’ll be asked to make in addition to your usual remuneration. While special assessment costs are not tax-deductible, you may be able to add a rider to your homeowner’s insurance policy that will cover some occurrences, but not all. Sometimes you’re just going to be on the hook for these additional funds.
Specific condominium unit insurance is known as HO-6. Part of your HOA fee goes to insure the buildings and common elements, but an individual HO-6 policy will cover your belongings in case anything happens, protect you from liability if someone is injured inside your unit, and help you recoup costs of relocation during a disaster or because the building has to be tented for termite control.
The Bottom Line
There are pros and cons to purchasing a condominium unit over a traditional piece of property. They’re typically cheaper, insurance is less expensive, you can enjoy resort-style amenities, and you have much less work to do when it comes to repairs and maintenance.
However, every gorgeous condo you will find is managed by homeowner’s association, and you’ll need to factor in the fees they levy against each owner for the upkeep of the whole community.
Your HOA could be a joy to work with, or it can be the cause of hassle and headaches. The association should be the ones paying to fix the common elements of your complex — but always review condo disclosure statements and governing documents before buying so you know exactly what to expect.
If you’re on the hunt for a new home, it’s vital that you find a home inspector you can trust. At Windy City, our skilled and professional team is there to help you make sure you’re making exactly the right decision. If you have any questions about the process, reach out today!