Financial and Legal Questions to Ask Before Buying a Florida Condo
Very few people understand the need to ask financial and legal questions about a condo complex. However, the answers to these questions can affect how much you pay in fees, as well as how easy it will be to get a mortgage. Here are the financial and legal questions to consider before buying a Florida condo.
1. What Are the Condo Association Fees?
An important question to ask when buying a Florida condo is about the amount of the condo fees and what they cover. Typically, condominium association fees are based on:
- How many homes there are
- What it costs to run the community
- Whether there is a professional management company
- If there are funds set aside for major repairs or an unforeseen lawsuit
What the condo fees cover can be vastly different from community to community. Some condo neighborhoods have frills that you will be paying for in the condo fee, such as:
- Swimming pool
- Tennis courts
- Recreation center
- Gym
You may not need or want any of these things. This could factor into your decision to buy if that is the case.
2. Is the Reserve Fund Well-Funded?
How much money is in the reserve fund is, also, an essential question. Finding out what’s in reserve will show the financial health of the association. You want to know that the association has enough money saved up in case an unforeseen expense arises.
If the neighborhood is less than ten years old, a repair or reserve fund should, as a general rule, contain around 10% of the annual revenue budget. When the neighborhood is older, the budget ought to be closer to 25% or more. The older a building, just like with most things, the more maintenance it will need.
3. Do You Have Upcoming Assessments?
A special assessment is usually a one-time fee you pay to cover a significant expenditure the neighborhood needs. Replacing the roofs on all of the buildings would be a good example. This would obviously be a large expense.
Sometimes, a special assessment will be made rather than taking money from the reserve fund as a short-term expenditure. For example, your condo fee might usually be $350 a month but raise to $400 for a set amount of time. You will want to ask about this before buying a condo, not when find yourself with a massive unexpected bill.
4. Is the Florida Condo Complex Involved in Litigation?
You need to find out if there are any legal concerns. You want to be sure there aren’t any pending lawsuits. If there are, they could affect you financially farther down the road.
There are many reasons as to why there could be a lawsuit. One example is that the homeowners are suing the developer for not completing something or doing shoddy construction that caused some issues. This shouldn’t be a major consideration, most of the time, but it is worth investigating.
There are many questions to ask before buying a Florida condo. Be sure to do your homework, so you are happy not only the day you buy but for years to come. If you are thinking of buying or selling a condo in the area, we would love to speak with you.