The resale condo market is a huge part of the current condo trend. But existing condo communities provide unique challenges first time condo buyers must consider. If you’re looking to buy a resale condo, consider following eleven condo questions in your research.

1. Do You Understand What the Condo Fees Cover?

When you buy a resale condo, you are responsible for paying monthly condo fees. Also known as maintenance fees, these fees are payable to the Homeowners Association (HOA) in the United States and the Condo Board in Canada. Condo fees are a defining factor of the condo lifestyle and a significant part of your monthly budget.

But do you know what these fees actually cover? Each building is different. In some condos, they cover every aspect of maintenance up to the walls in your unit. In other buildings, a broken window is your responsibility.

By knowing exactly what is and isn’t covered, you’ll be able to better budget for unexpected maintenance and repairs.

When researching condo fees for a resale condo, it’s important to understand exactly what you’re paying for. You can find this information in two places:

• The MLS listing will show the building’s amenities.
• The condo documentation will show what repairs and maintenance are covered by condo fees. Access to this information wil be part of the conditions of an offer. You’ll get to review the condo documentation before finalizing the deal.

Note – Condo fees may seem like an extra expense in addition to your mortgage. However, you’ll save some of that money on gym membership and maintenance bills. Not to mention you’ll enjoy more free time by not having to deal with maintenance and repairs.

2. Have You Researched the Building’s Amenities?

Access to building amenities is closely related to the issue of condo fees. The condo lifestyle isn’t just about living in a great location. It’s also having access to amenities such as gyms, swimming pools, and business centers.

Condo fees cover the cleaning, maintenance and management of these amenities.

Condominium communities differ considerably when it comes to amenities offered. Before placing an offer on a resale condo, so it’s important to know what the building amenities are.

Some buildings may have dedicated fitness centers and entertainment spaces. Other will forgo or limit amenities in exchange for lower monthly fees.

Note – Don’t assume that all phases of a condo development share each other’s amenities. Access to amenities depends how the condo corporation is setup or the layout of the development.

3. Have You Looked into the Condo Rules and Regulations?

The condo lifestyle is attractive for many reasons. One of these is community living. This gives you access to a more central location and better amenities than you could afford by going it alone.

This way of life also comes with a few restrictions, including the need to abide by certain rules and regulations. This is to ensure that all condo residents get to enjoy their units in peace.

Before you make a short list, it’s important to research and compare the rules and regulations of each potential building.

You can get information on the condo’s rules and regulations prior to placing an offer to buy a resale condo:

• Your realtor may be aware of the building’s rules from having visited before hand or through word of mouth
• The seller’s realtor can provide a copy of the bylaws and regulations upon request.

Note – You’ll want to pay special attention to restrictions or limitations on noise, renovations and upgrades, partial or complete partial or complete pet bans, subletting, short term rental, rental limitations, use of your balcony area and window coverings.

4. Is the Building in a Healthy Financial and Legal State?

Each condo building and community has its own unique history and present day challenges. Some are in healthy condition, while others are on the brink of bankruptcy.

Before you decide on going through with a condo purchase, it’s critical you go over the financial and legal status.

You can get historical financial statements as well as a bill of known issues two ways:

• The seller’s realtor can provide a copy of condo board minutes and financials prior to you placing an offer.
• When placing an offer, include an agreement of purchase that lets you review the documentation. Your lawyer and realtor will be able to help you determine if the building is in a healthy condition.

When it comes to legal issues, it’s important to make sure there’s no past or pending litigation in the community. Once a condo tower is built, there’s no remedy to a lawsuit other than financial compensation. This could quickly burden owners. Any potential or active litigation will be noted in the condo documentation. This is usually reviewed by your lawyer in the conditions of sale.

Note – If a condo development is mismanaged or has pending litigation, the reserve fund may not be insufficient to cover costly repairs or legal fees and settlements. When this happen, you’ll be asked to pay a special assessment. This is a lump sum paid out of pocket that can run into the thousands.

5. Have You Researched the Condo Building’s Management Team?

A condo board is made up of fellow owners who make strategic decisions on the future of the condo development. However, condo management companies (hired by the board) take care of day to day operations and maintenance.

Before buying a resale condo, find out which company manages the development. Companies usually leave their contact information at the entrance of each building. Take the information down and do a bit of internet research. Your realtor may also have heard of the company through word of mouth or first hand experience.

Note – Like all things in life, there are good management companies and less capable ones. Unfortunately, a bad management company can contribute to the deterioration of a condo building. After a few years, this translates to renovations which leads to higher condo fees.

6. Is Parking and Storage Space Available With This Resale Condo?

The condo lifestyle allows you to live in a more central location than you could otherwise afford. While this is mostly a good thing, there are some challenges associated with inner-city living. Notably, you’ll have less storage space compared to a suburban house.

When you’re living in a condo, extra storage space is worth its weight in gold. Unfortunately, a resale condo comes the way it’s sold. Unlike a pre-construction condo, you can’t add storage during the purchase.

You’ll find parking and storage information on the MLS listing. However, in rare cases, this information may be inaccurate. An owner may think he or she is the owner of a parking spot or storage locker but in reality isn’t.

Review the status certificate of the condo before finalizing an offer. Parking spots or storage lockers are real estate assets that are attached to the status certificates.

Note – As you compare potential resale condos, check parking and storage space. In the absence of either of these, calculate parking fees and storage unit rentals in your budget. This may make you reconsider whether the condo is worth placing an offer on.

7. Have You Looked into Noise Issues and Other Complaints?

It can be almost impossible to get an accurate feeling for a condo building until you move in. Unfortunately, you won’t be able to rent a room for a night and get some experience on the ground. But there are a couple of different ways you can discover issues before you sign a contract:

• Speak with the neighbors. This is a great way to find out about the pros and cons of a building, including ongoing noise issues and other complaints. Unhappy residents will be quick to give you an earful.
• Review the annual general meeting minutes. Here you’ll find if issues were brought up and whether or not they were addressed.

Note – If you are sensitive to noise from neighboring units, consider buying a condo in a modern concrete structure. Concrete floors dampen most of the noise from one floor to another. In modern buildings, fire barriers between units also help to reduce noise transfer. Finally, consider buying a condo on a high floor if you don’t want to hear street noise.

8. What Type of Insurance Coverage Will You Be Required to Get?

Most people create a working budget before they decide to buy a condo. Your mortgage payments are likely to be your first and most important budget consideration. But people often forget about condo insurance.

Each individual condo development has building insurance. However, it only cover the common elements and not your condo unit or the items in it. You’ll have to get your own condo insurance.

Once you move in, condo corporations will request proof that your unit is insured. Depending on your building, you may be required to submit proof of insurance every year.

You can find what the condo insurance requirements are by reviewing the condo rules and bylaws.

Note – Each condo corporation sets the minimum liability coverage requirements. These days, the minimum is $1,000,000 in damages but the trend is going towards the $2,000,000 mark. This covers not only your unit but any damages a water leak or fire may cause to other condo units.

9. Do You Have Enough Set Aside for Condo Closing Costs?

Condo closing costs are a series of small fees and expenses that take place once the resale condo is bought and transferred to you. These include, but are not limited to:

• Property tax adjustments
• Land transfer taxes
• Contents and liability insurance
• Utility hook up fees
• Legal fees (notary, lawyer)
• Home inspection
• Moving costs

In the US, some mortgages allow you to roll some (not all) closing costs into the loan. Check with your loan issuer what your options are. Canadians on the other hand can’t finance closing costs. Whether in the US or Canada, you’ll have to pay for closing costs out of pocket.

Note – Most of the condo closing costs vary by city and even neighborhood. While you can find out how much each closing cost is by researching online, the easiest way to get that information is by talking to your realtor.

10. Does this Resale Condo Meet Your Long-Term Needs?

As one of the biggest purchases you’re ever likely to make, buying a resale condo is a serious and long-term decision. Before choosing which to buy, here are a few long-term considerations you should take into account:

• If you change jobs, will the condo’s location affect your commute time?
• Will the condo mortgage payments affect your financial independence?
• Does condo life meet your lifestyle needs?
• Are you planning on having children soon? If so are you willing to raise a family in a condo?

Note – Most lifestyle needs include access to public transportation and highways, proximity to schools and places of employment and being near amenities. Most of these needs are tied up with location, so try to anticipate the future needs of your family and make sure the condo community is located in a desirable location.

11. How Resalable Is the Condo?

There are lots of factors to consider when buying a resale condo. But resale value is perhaps the most crucial matter of them all. The condo you buy today could have a big impact on your future finances based on three factors:

• How much equity you can build via mortgage payments. If you buy a condo outside your price range, most of the mortgage payments will go towards paying interest instead of principal
• Market appreciation. Ideally the condo you buy will gain in value at the same pace, or faster, than the rest of the real estate market
• How easily the condo will sell years down the road. A condo that takes months to sell may prevent you from buying a future property. You may be forced to use creative financing to unlock your equity to buy your next property. That can get costly.

To gauge if a condo will resell well, consider the golden rule of real estate: location, location, location. When considering which condo to buy, you should put more weight on properties in desirable locations but that aren’t expensive yet.

Note – Other than location, how desirable and quick to resell a condo is will also depend on condo fees, amenities, oversupply issues, building size and age, and exclusivity.

Wrapping Things Up

There are lots of considerations when buying a resale condo. It’s important to make a list of the things that are important to you and be honest with yourself. Choosing the right condo involves a careful balancing act between your lifestyle, finances and a bit of research.