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June 24, 2004

Contemplating Condos - Issue 12

Read those condo documents!

Gerald Rotering

Peace of mind is a wonderful thing when you are making a major purchase. When it’s a used car, you have a mechanic check it over before you finalize the deal. If it’s a resale house (or perhaps even new), you’re well advised to have a professional home inspector go through it before you sign off on the purchase. Such steps protect you when you make these substantial investments.

In the case of condominium purchase, buyers should know what documents are needed, and then actually read them, although it may be impossible to understand all that these will contain. Even without broad condominium familiarity, though, you’ll be surprised how much of the material will make sense to you, and informs you well enough to reach a conclusion, or to ask further questions. For example, bylaws are in plain English, and if you see “no dogs”, and “no one under age 18”, but you have both a dog and a child, this obviously isn’t the condominium community for you.

Beyond your own reading, though, professional help can be invaluable. You need someone to interpret how well or poorly an existing condominium development is governed, managed and funded, what political issues may be brewing, or whether the new condo-home builder is leaving both mechanical and governance issues for future owners to squabble over in years to come. Whether resale or new, every condominium corporation is facing some issues. The question is whether these issues warrant collapsing the purchase and buying elsewhere. In fact, the need for withdrawal from a purchase is rare, but I’ve seen it happen more than once, and you don’t want to be that rare instance when you should have “walked”, but didn’t.

In most cases, your purchase proceeds happily, but it will still be invaluable to know in advance what acceptable issue is pending. A given resale condo might be perfect, even though a professional advisor has alerted you that a special assessment to top up the reserve fund will likely be needed soon. If the price of the home is right, set that much aside, and enjoy condo living. If or when the “cash call” comes, write the cheque without concern. In the case of new condo homes, an example might be that the builder is allowing satellite dishes, but you’ve been alerted that the bylaws prohibit them, and that a discussion about their removal may well take place.

As a condominium-specialist Realtor, I ensure that my clients receive all the documents we need from the new-home or resale condominium seller, and then I assist with interpretation of all the information. If the public demands it, more Realtors will obtain the training and gather the experience to do this as part of their package of services for home-buying clients.

Sometimes, of course, a Realtor is not involved, and some are simply unwilling to assume the liability that accompanies any recommendation regarding a major purchase. In those cases I recommend a third-party documents review, which in recent years has become available in many cities. Such a review costs about the same as a thorough car mechanical inspection, and protects a far larger investment. Look in the yellow pages under condominium to see if such as service is available where you live. If not, consider using such a service via courier, fax and phone.

If none of these are possible, see if someone you know is a condo property manager, and may be willing to go over the documents with you. Otherwise, have your lawyer go over the legal aspects, such as bylaws, and read them yourself, then ask further questions of the seller, of condo Board members, or of the property manager. Even friends or family who have owned condo homes and perhaps been condo Board members will have insights that can help.

The first goal is to avoid those very few condominium corporations that are severely under-funded, that have major un-addressed mechanical issues, or which are politically divided. Beyond that your review, whether assisted or not, helps you to understand about the corporation that you will co-own while you enjoy the private condominium home and its maintenance-free lifestyle. Earn your peace of mind and, if possible, be professionally supported.

Gerald Rotering is a condominium-specialist Realtor with Realty Executives, Chinook City, is President of his own building’s condominium corporation, and is a professional member of the Canadian Condominium Institute. Extensive further information about condominiums can be found on his web site:

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