Frequently Asked Condominium Questions

Purchasing a condominium involves several critical considerations, including queries about homeowners' associations, special assessments, insurance, financing, resale certificates, the nature of condo ownership, and the various types of condos. To assist you in making well-informed decisions about condo ownership, we have compiled answers to some of the most common questions.

Understanding HOA Fees
Homeowners' association (HOA) fees are regular payments made by each condo owner to the HOA. These fees, sometimes referred to as assessments, are used for maintaining shared spaces, paying for building staff, and occasionally covering certain utilities like sewage, water, or garbage disposal.

Typical Costs of HOA Fees
HOA fees generally vary between $200 to $400 monthly for low-no amenity buildings, and range all the way into the low-thousands for ultra-lux buildings. The amount depends on your condo's size, the type of building (high-amenity or low-amenity), and other factors. Buildings with more services and amenities usually have higher HOA fees to support these additional costs.

The Value of HOA Fees
Deciding if the benefits justify the cost of HOA fees is subjective. However, timely payment of these fees is crucial, as HOAs can impose liens or even initiate foreclosure for unpaid dues.

Frequency of HOA Fee Payments
HOA fees are usually paid monthly, but some associations may require quarterly or annual payments. The payment schedule is determined by your specific association's rules.

Consequences of Non-Payment
Failing to pay HOA fees can lead to serious consequences, including legal action by the association.

Condo InsuranceNecessity of Condo Insurance
Condo insurance is typically mandatory. While the HOA's master policy covers the building's exterior and common areas, you are responsible for insuring the interior of your condo and your belongings. Most mortgage lenders require HO-6 condo insurance before approving a loan.

How Condo Insurance Functions
Your HOA dues often include insurance for the building's structure and common areas. Your personal insurance covers the interior of your unit, making premiums generally lower than homeowners insurance.

Coverage and Cost of Condo Insurance
Condo insurance policies usually include two types of coverage: the HOA's master policy for external and common area damages, and your personal HO-6 policy for interior and personal property damages. The average cost of HO-6 insurance is around $480 annually.

Owner's Title Insurance
Owner's title insurance safeguards you against claims against your property that predate your ownership. Lenders often require this insurance for mortgage approval.

Determining Adequate Insurance Coverage
To determine the right amount of insurance, inventory your personal possessions and assess any coverage gaps in your HOA's policy, especially for internal structures.

Special Assessments
Understanding Special AssessmentsSpecial assessments are additional fees charged by the HOA for unexpected expenses or major improvements. These can impact a condo's value and should be disclosed during sales.

Tax Implications of Special Assessments
Special assessments are generally not tax-deductible, except when used for capital improvements, which can increase your condo's tax basis.

Common Elements and Ownership
Defining "Common Elements" Common elements refer to shared facilities within a condo complex, like pools, gyms, and parking areas. "Limited common elements" are shared amenities designated for specific owners.

Extent of Ownership in a Condo
Condo ownership includes the interior space of your unit, potentially including parking spaces or other amenities.

Condo FinancingCondo Financing Guidelines
Condo financing varies based on the loan type (traditional bank loan or FHA loan) and requires meeting certain criteria, including credit checks and HOA evaluations.

Common Financing Options
The most common financing methods are conventional bank loans and FHA loans, each with unique benefits and requirements.

Comparing Condo and House Financing
Financing a condo can be as straightforward as financing a house, depending on the building's rental ratio, HOA health, and any legal issues involving the HOA or developer.

FHA-Approved Condos
FHA-approved condos meet specific criteria, including owner occupancy ratios and financial health of the HOA.

Condotels
Condotels are hotel-condo hybrids, where individual units are owned and can be rented out when not in use by the owner. Financing options and fees for condotels vary.

Resale Certificates
Resale certificates provide essential information about a condo's HOA before purchase. They are necessary for both buyers and sellers and involve a non-refundable fee.

Resale Certificate vs. Seller's Permit
Resale certificates differ from seller's permits, which authorize tangible property sales.

Safety and Lifestyle in High-Rise Condos
High-rise condos typically offer enhanced security features and are suitable for those seeking a low-maintenance, travel-friendly lifestyle. They also adhere to strict building codes for safety.

Noise Considerations in High-Rise Living
Noise levels in high-rise condos can vary based on construction quality and location. It's important to communicate your noise preferences to your real estate agent.

Differences Between Houses and Condos
Houses involve purchasing the entire property, while condos involve owning the interior space with shared responsibility for common areas.

Cost Comparison: Condo vs. House
The cost of condos and houses can be comparable, but condos often include higher HOA fees, which cover additional services and maintenance.

Condos vs. Townhouses
Condos and townhouses differ in ownership structure and maintenance responsibilities, with townhouses offering a blend of single-family home and condo benefits.

Deeded Parking in Condos
Parking options in condos vary, including deeded spaces, tandem or side-by-side arrangements, and off-site parking. These factors can influence convenience and resale value.