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Buyer Beware: Things To Consider Before Purchasing A Condominium

As the old saying goes, ‘every man may justly consider his home his castle and himself as the king thereof.’  However, when purchasing a condominium unit, your powers as king (or queen) and the ability to do as one pleases within your castle are greatly limited.  The fact is that most purchasers of condominiums are unfamiliar with what they are purchasing, including the pertinent statutory and contractual regulations, as well as financial risks and obligations.



The following provides a list of key items to consider and questions to ask before purchasing a condominium.



FINANCIAL CONDITION OF THE BUILDING



What is the Association’s annual budget?  Does the association have reserves or do they traditionally waive reserves?  Are there pending special assessments?  Review the audits.



PHYSICAL CONDITION OF THE BUILDING



What is the age of the property?  Are you purchasing a property that was recently built – thus facing potential construction defect issues? Or are you purchasing a mature property that is nearing its 40 year recertification deadline?  Has the Association engaged in any significant repair and/or restoration projects?  Are there any major anticipated restoration projects planned?



LEGAL



Is the Association involved in any lawsuits?  If so, what potential financial impact could the lawsuit have on individual unit owners?  Are there construction liens filed against the Association?  Is there a pending lawsuit against the developer or general contractor for construction defects?  A general understanding of the Association’s legal position is important in order to properly evaluate the overall health of the condominium.



SALES AND LEASING RESTRICTIONS



Sales and leasing restrictions critically affect a buyer’s intended use of the property as well as the potential value of the property.  Some documents prohibit the lease of units, or otherwise limit the time period for leasing.  Many Associations seek to restrict sales to investors by precluding the sale or lease of units within a certain time period after the initial purchase.  Other documents require that sales and leases be subject to the prior written approval of the Association. These restrictions should be carefully considered when purchasing a condominium. Investors generally want properties to have little to no sales or rental restrictions, while long term residents may view these restrictions as a benefit, seeking to limit investors and renters at the property.







PET RESTRICTIONS



Are you allowed to keep pets? Many associations have restrictions as to the number, size and types of pets that are permitted on the property.  It is important to check the Association’s governing documents to determine whether the property is subject to pet restrictions.



UNIT MODIFICATIONS/ALTERATIONS



If you are a fan of home renovation projects, you may be disappointed to find out that your ability to makeover that “fixer-upper” is limited. On a very basic level, most associations require architectural review and approval of any proposed modifications, and require that all work be done by licensed, insurance contractors in compliance with all permitting requirements. Many associations have limitations on the types of flooring that may be installed, including specific soundproofing requirements.  Other Associations limit the types of changes that may be effectuated to a Unit, such as changes in the layout of a unit, or changes to windows.



CORPORATE GOVERNANCE



What is the composition of the board of directors?  Are there committees?  How is the property managed?  How often are elections held?



MIXED USE DEVELOPMENTS



Mixed use developments, consisting of a combination of residential and commercial properties have become increasingly popular. Oftentimes, however, the governing documents contain provisions that favor the rights of commercial unit owners to the detriment of residential unit owners.  It is important to understand the rights and benefits bestowed on the commercial owners, and how this affects residential unit owners.



PARKING/VEHICLE RESTRICTIONS.  Every condominium has different requirements concerning parking.  Consideration must be given as to whether there is a limitation on the number and size of the vehicles that may be maintained at the property.  Some Association have assigned parking, which is not recorded in the Public Records or mentioned in a Unit’s deed, but is instead maintained as part of the official records of the Association.  The problem with this, however, is that oftentimes the Association does not maintain accurate records of parking assignments.  It is critical that a prospective purchaser obtain confirmation as to the parking assignment in connection with the purchase of his/her Unit.  Additionally, a purchaser should be informed as to whether secondary parking may be assigned and/or whether the Association has the right to re-assign a parking space.  Typically, an Association will have the right to re-assign a parking space in order to comply with applicable ADA requirements.  Please note that the re-assignment of “deeded” spots is more complicated.  Lastly, Buyers may want to ensure that the property has sufficient parking to meet their specific needs – many older properties were built with a limited number of spots, while some newer properties are currently being built with no parking at all!



STORAGE UNITS/CABANAS/GARAGES.  Many properties offer storage units, cabanas or detached garages as limited common elements appurtenant to Units.  Often, however, these limited common elements are assigned by way of a written assignment that is maintained in the records of the Association.  Again, the problem here lies in that oftentimes, the Association does not maintain accurate records of the assignments.  As such, it is critical that a prospective purchaser confirm all assignments of limited common elements. 



GUEST POLICIES.  Many associations try to limit the traffic flow on the property by adopting guest policies that require pre-registration and/or otherwise restrict or prohibit use of the property by guests in the absence of the Unit Owner.  This is certainly a factor to consider for purchasers who often have out-of-town guests.



Alessandra Stivelman, a partner at Eisinger Law, is a Board Certified Specialist in Condominium and Planned Development Law and AV rated. She focuses her practice on community association and real estate law and can be reached at (954) 894-8000 x 304 or astivelman@eisingerlaw.com.



Carolina Sznajderman Sheir is a partner at Eisinger Law She focuses her practice on real estate law, community association law, commercial litigation and developer representation and can be reached at 954-894-8000 x 238 or csheir@eisingerlaw.com.



Eisinger Law., is a full service Florida law firm focusing on community association law, real estate law, developer representation, commercial litigation, insurance law and estate planning. For more info visit eisingerlaw.com.