THURSDAY, JUNE 27, 2024
The Ultimate Guide To Buying a Condo
buying a condo
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So you’re thinking about buying a condo… in the District hmmm… DC or possibly even Montgomery County (MD).
Gotcha!
Condominium [aka condo] living is a very popular option for many Americans. Currently, in some parts of the country and especially in the DMV (DC-Maryland-Virginia), more than 1-in-3 new homes built is a condominium.
Interest in condominiums tends to grow with the shortage of rentals, relatively low mortgage interest rates, and urban core renewal.
If this is your first time buying a condominium (typically shortened to just condo), you may be surprised by the various matters to consider. (Yikes!) Buying a condo is not the same as buying a house. You’ll likely have at least one adjoining wall with your neighbors, as well as other physical elements that are different from a single family detached aka freestanding home.
Then there’s condo financing. The process you need to go through to make your decision and obtain a mortgage for a condo may differ significantly.
We created The Ultimate Guide To Buying a Condo to help you become an informed condominium buyer. You will find all the basic background information you need to get started on your path to condominium ownership. Additionally, we’ll identify important questions to ask and the people you should be asking.
We hope you get lots of value about buying a condo. (And there’s a lot here!)
I hope you find this guide helpful!
Dana Ash-McGinty | Principal Broker, Realtor® (DC,GA,MD)
Dana Ash-McGinty, Washington, DC real estate broker
Note: Please see the glossary at the end for definitions of some of the terms used in this guide.
buying a condo in dc
Part 1 – Just What is a Condominium?
What Types of Condominiums Are There?
What Do I Own When I Buy a Condominium?
What Rules and Restrictions Might I Encounter in a Condominium?
Living in a House vs. Condo Living
Who Takes Care of the Building and Grounds?
Getting a Mortgage for a Condo
What Insurance Will I Need When Buying a Condo?
Will I Be Able To Rent My Condo?
Part 2 – Is Buying a Condo Right For You?
New, Re-Sale or Conversion Condo— What Are the Differences?
Pros vs. Cons of Buying a New Condo
Conversion Condominiums
Buying an Existing Re-Sale Condo
What Records Am I Entitled To When Buying a Condo
What Are the Costs for Buying a Condo?
What’s Included in Condo Fees?
Part 3 – Who Should I Consult About Buying a Condo?
Do I Need a Realtor To Buy a Condo?
What Does a Home Inspector Look For In a Condo?
Working With a Condo Mortgage Lender/Broker
Questions To Ask When Buying a Condo
Condo Terms
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Let’s get started…
buying a condo, buying a condo in dc
PART 1
Just What is a Condominium?
Most people have a general understanding of what a condominium (aka condo) is: you own your “unit” within a larger building or community of other condo owners.
Condominium living can offer the prospective homeowner various attributes, such as more affordable housing and low maintenance lifestyle. Many condominiums have enhanced security features over those found in single-family houses. Condominiums can be complete communities within one complex offering a wide range of social, entertainment and recreational activities.
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But… here’s what you really need to know:
A “condominium” refers to a form of legal ownership, as opposed to a style of construction.
A condominium is a type of property ownership involving multiple-unit dwellings where a person owns his or her individual unit, but the common areas are owned in common. All members share in the costs and maintenance of the common areas.
Condominiums are most often thought of as high-rise residential buildings, but this form of ownership can also apply to townhouse complexes and low-rise residential buildings.
Condominiums consist of two parts. The first part is a collection of private dwellings called “units“. This is your own personal “condo” and everything in it.
Each unit is owned by and in the name of the purchaser of the unit. The second part consists of the common elements (sometimes called “common areas”).
Condo Units
buying a condo in dc
One description of a condominium ownership is the air space of a unit in a multi-unit development. This is the air space within the four walls that divide a unit from other units or common areas in the property.
When buying a condo, owners receive a deed for their unit just like if they bought a house. They own their unit in fee simple, which is the least restrictive form of real estate ownership recognized by law.
Similar to a a single family detached house, a condo owner generally has the right to sell and use the unit as they see fit, unless there are covenants restricting such use or transfer. In simple terms, a covenant is an agreement that provides a right or imposes a restriction or condition that is binding on the owner of the condo. You’ll also see covenants on the use of the common elements.
Owning a condo unit is very different than owning a detached house. For example, you may own the interior walls to your unit, but you may not own the exterior walls. Consequently, it’s super important to carefully review the condo docs to understand what you own and what you can do. We’ll be discussing these documents in “What To Look For in the Condo Docs“.
Common Elements
buying a condo in dc
Condo Gym
General common elements are controlled by the condominium management. This may include lobbies, hallways, elevators, recreational facilities, walkways, gardens, etc. Common elements may also include structural elements and mechanical and electrical services. The ownership of these common elements is shared amongst the individual unit owners, as is the cost for their operation, maintenance and ongoing replacement.
Each unit owner has an undivided interest in the common elements of the building. The unit factor for any particular unit will generally be calculated in proportion to the value that the unit has in relation to the total value of all of the units in the condominium corporation. The unit factor will tell you what your ownership percentage is in the common elements and will be used in calculating the monthly fees that you must pay towards their upkeep and renewal.
Items purchased, installed, removable and usable only by individual condominium unit owners are not common elements.
Limited Common Elements
Limited common elements are those that less than all the owners have the right to use. Limited common elements may include things that are directly connected to individual condominiums such as outer doors, windows, and balconies. They may also include amenities which service every community resident equally. For example, use of a common patio might be limited to all the owners of a certain floor of the condominium building. Other examples of amenities that are limited common elements are: driveways, garages, elevators, clubhouses, swimming pools, and boat slips.
Condominium Association
The condominium association manages the condominium and all of the condo owners are members of the association. Members will elect a board of directors and officers to run the association and make decisions on its behalf.
Keep in mind that condo owners are responsible for paying condominium fees that will be used to maintain the common elements and provide other condo services like landscaping and snow removal. These fees are often paid on a monthly basis much like a tenant pays rent. If your condominium association doesn’t maintain sufficient reserves, you may get hit with a special assessment for major or unexpected repairs.
Find out what’s included in the condo fees.
What Types of Condominiums Are There?
More than ever, people are choosing to live in condos, lofts, and townhomes. For some, this decision is about cost and convenience.
Condo vs. Apartment
While some condos and apartments may look the same, the difference is the type of ownership. A condominium is a unit owned by an individual homeowner (or investor) who is legally entitled to share the use of common areas with all other owners.
An apartment building or complex is usually owned by an individual or corporation, with individual apartment units leased to occupants. Apartment tenants may use shared facilities and amenities according to the conditions spelled out in their leasing rental agreement.
As a practical matter, builders tend to build condominiums to a higher quality standard than apartment complexes because of the differences between the rental and sale markets.
What is a Co-op?
Co-operatives, or co-ops are not considered to be real property. (Real property is fixed property, principally buildings and land.) Co-ops are owned by a corporation, and co-op buyers own shares in the corporation that entitle them to the exclusive use of their units. Co-ops tend to have fewer amenities than condos and are often located in older buildings. Most co-op associations require that prospective buyers be approved of a committee comprised of current co-op owners.
Types of Condo Styles
Condos, lofts, and townhomes are types of condominium ownership.
Condominiums come in various styles including, high-rise (7+ stories) or low-rise, townhomes, garden-style, etc. There are even mixed-use condominiums that are partly residential and partly commercial buildings. They come in various sizes with diverse features and they can be found in almost every price range.
Here are the various condo styles:
high rise (7+ stories) – The term “high-rise” refers to a building that vertically rises seven or more stories; in major urban areas buildings can be 30+ stories
low rise (6 or less stories)
townhomes – this is different than a row home; typically 2 stories, but may have 3+
garden style condo – is an outdoor style (garden) condo that is typically 1-3 stories. The complex has a garden-like setting, surrounded by lawns, trees, shrubbery, and gardens.
buying a condo, townhomes, buying a condo in dc
Townhomes
What Do I Own When I Buy a Condo?
When you buy a condominium, you own your unit, as well as a percentage of the common property elements allocated to the unit. The boundaries of each individual unit and the percentage of common elements you own may vary from condominium to condominium, depending on how they are specified in the condominium’s governing documents. Sometimes, the unit boundary can be at the backside of the interior drywall of the unit’s dividing walls. Alternatively, the unit boundary can be the centre line of the unit’s walls.
The boundaries of your condominium unit are an important consideration at the time of purchase— particularly if alterations and renovations are a potential part of your purchase plan.
buying a condo in dc
The unit typically includes any equipment, systems, finishes, etc. that are contained only in the individual unit. The right to use one or more parking spots and storage areas may be included. While you may have exclusive access to parking spot or storage area, you seldom actually own the space itself.
Components of building systems that serve more than one unit, such as structural elements and mechanical and electrical services, are often considered part of the common property elements, particularly when they are located outside of the unit boundaries specified in the condominium’s governing documents.
There may be some parts of the condominium complex that are called “exclusive use common property elements“. They are outside the unit boundaries, but are for the exclusive use of the owner of a particular unit. Balconies, parking spaces, storage lockers, driveways and front or rear lawn areas are common examples of exclusive use common property elements. It is important to be aware of any exclusive use common property elements before you make an offer to purchase a condominium. While these spaces are exclusive to your use, there may be restrictions on how and when you use them. For instance, you may not be able to park a boat, RV or commercial vehicle in your assigned parking spot. There may also be restrictions on what you can place on your balcony.
What Rules and Restrictions Might I Encounter in a Condominium?
Before buying a condo, it is important to know all of the rules and regulations for the building or complex.
Every condominium is governed by its own unique rules, regulations and bylaws. These may be very strict or very relaxed depending on the nature of the condominium corporation. These are necessary to ensure that condominiums are properly operated and maintained and to define the rights and obligations of the individual owners. With respect to rules regarding the individual owners, condominiums may have restrictions regarding the number of occupants per unit, pets, noise, parking and when certain amenities may be used.
Many condominiums have strict rules concerning the alteration of the unit space or its appearance. For example, the condominium corporation may require all the exterior doors of units to be the same color to keep the architectural and community aspect of the condominium intact.
Additionally, you may have to get the permission from the condominium’s board of directors before you change exterior fixtures or install a satellite dish, especially as some changes may affect the condominium structure or safety. Noise is an important consideration, especially for people moving from a single-family dwelling to a multi-unit condominium. Many condominiums have rules regarding what noise levels will be tolerated and at what hours. For example, if you are hosting a party in your unit, you may be asked to turn the music down at a specific hour. You may wish to clarify the rules regarding noise, and if possible, talk to current residents about any noise problems they have experienced in the past and how they were handled.
Individual condominium owners may be obliged to attend condominium meetings or serve on condominium boards and committees. Almost all condominiums have requirements for the payment of monthly condominium fees. There can also be mandatory charges for unforeseen repairs to the condominium common elements.
Be sure to carefully review and consider all rules and obligations when considering buying a condo. They should be available from the unit’s vendor (the seller), the property manager or the board of directors. The rules of the condominium will be clearly outlined in the condominium governing documents, and you should become familiar with them prior to purchasing a particular condominium unit.
While the rules and regulations of condominiums may initially seem to be overly strict, particularly to those used to rental housing or owning their own home, they help to ensure that condominiums are safe and enjoyable communities to live in for all concerned.
Living in a House vs. Condo Living
buying a condo in dc
Living in a detached single-family house can be quite different from living in a multi-unit condo building. Here are some points to consider if you’re thinking of making the switch from a house to buying a condo.
Noise – In a multi-unit, your neighbors are much closer, so you may hear them more. Many condominiums have strict rules regarding how much noise will be tolerated, and at what hours of the day. Noise can also come from the mechanical services such as plumbing, heating, ventilation and air-conditioning systems, elevators and garbage chutes. When purchasing a condominium, you may want to consider the location of these services relative to the unit you are thinking of buying. Additionally, when buying a new condominium, you may want to ask the developer if any sound transmission reduction measures have been used in the construction of the building’s walls, ceilings and floors. When buying an existing condominium, try to visit the unit during the evenings or weekend to get a sense of what the noise may be like at the time you are most likely to be in the building. Consider the location of the unit relative to elevators and garbage chutes. Check to see if the unit faces a busy highway. If so, air-conditioning might be a necessary feature so that windows can be kept shut in the summer.
Independence – Condominium living involves compromise. In return for having someone else fix the roof or cut the lawn, you will no longer have the final say in what color you want your shingles to be or the timing of yard maintenance. Your condominium unit will likely be considerably smaller than your current home. You’ll need to consider which furniture and appliances will fit and what you might have to leave behind. For instance, your unit may not be able to accommodate a washer-dryer set which may mean having to use a common laundry room.
Lifestyles – Many condominiums are specially suited for certain lifestyles, such as families with young children, or seniors. Any condominium provisions regarding pets should be known as well. It is important to ensure that the prevalent lifestyle of the condominium you are considering fits your lifestyle.
Security – Many condominiums offer increased security services, such as closed-circuit cameras in lobbies and parking garages and security guards, to ensure that only unit owners and authorized personnel can access the building. Your condominium may require that any guests to your unit sign in and out of the building. Make sure you are comfortable with the security arrangements before buying.
Unit Occupancy – While many owners of condominium units actually live in their units, some condominium buildings have a large percentage of the units rented out to others. If this is important to you, try to find out from the property manager what percentage of the building is owner-occupied. This is an important consideration, as a condominium building dominated by rental occupancies may not show the same pride of ownership and sense of community and security as a building that is fully owner-occupied. Additionally, absentee owners may not have the same maintenance and repair priorities for the building as owners who actually live in the building.
Who Takes Care of the Building and Grounds?
So, “How does a condo work“? Who handles the day-to-day operations?
Most condominium corporations contract-out the day-to-day operations of the condominium to a property management company under the direction of the condominium’s board of directors. The cleaning of common areas, payment of common area utility bills, operation and maintenance of the central space and domestic hot water heating and air-conditioning systems, snow and garbage removal and the collection of monthly maintenance fees may fall under the jurisdiction of the property manager. There are usually limits to the property manager’s authority. For example, anything that requires a major expenditure, or an expenditure not accounted for in the annual budget, may have to be approved by the board of directors. The property manager is not usually responsible for items or operational problems within individual units, unless they are related to the common elements (e.g., heating systems, roofs, windows, exterior walls).
The condominium unit owner is responsible for some maintenance duties and the condominium corporation for others. These responsibilities vary from condominium to condominium and should be clearly laid out in the condominium’s governing documents.
Maintenance duties for the unit owner can include:
Internal unit plumbing, appliances, heating, air-conditioning or electrical systems that are contained in and serve only that unit;
Cleaning window surfaces that are accessible from inside the unit;
Cleaning some parts of the common elements, such as balconies and patios that are assigned to or exclusive use of, the unit holder
Maintenance duties for the condominium corporation can include:
Common plumbing, electrical and heating and air-conditioning sys
Posted 11:41 AM