What Should I Know Before Buying a Condominium?
Buying a condominium is different than buying a house. If you are purchasing a condominium unit in Maryland, you should know about the legal requirements involved in this kind of real estate transaction. The seller is required to provide you the “Resale Package.” The Resale Package includes the following:
- The declaration of the condominium association.
- Amendments to the declaration of the condominium association.
- The rules and regulations governing the condominium.
- Information about the condominium’s finances, such as its balance sheet and budget.
The seller is also required to provide you with further information about the condominium association and the unit being sold in a document called the “Resale Disclosure Certificate.” This Certificate and the Resale Package must be available for your review no later than 15 days before closing. Often, these documents are uploaded to a cloud service by the property management company, and the seller pays a fee to download them and forward them to the buyer.
You must acknowledge in writing that you have received the Resale Package and the Resale Disclosure Certificate. Then, you will have seven days from that date to review the information during which time you can cancel the contract if you so choose. If this happens, you can get a full return of your deposit.
Other Considerations When Buying a Condominium
Condominiums often have amenities on the property, such as a pool, clubhouse, and other common areas. Owners pay homeowners association (HOA) fees to maintain them, and they can be quite high. Be sure to tour these areas to see if they are well kept and worth the price you are being charged.
You should also ask about special assessments which are additional fees paid by each homeowner when the HOA reserves are depleted or unexpected expenses crop up, such as roof damage or an elevator repair. Reviewing the condo’s financial statements should help you determine if the reserve fund is well run and has adequate funds to deal with an emergency.
Each condo community has its own procedures for levying a special assessment. This should be outlined in the Declaration of Covenants, Conditions, and Restrictions, so you should read it carefully to see if the entire community gets to vote on an assessment or only the board of directors. If possible, you should meet the HOA president and board of directors.
Getting approved for a mortgage is different for a condominium which is designated as either warrantable or non-warrantable. A warrantable condo has been deemed financially sound and therefore eligible for home loans from Fannie Mae and Freddie Mac. A non-warrantable condo will have a higher down payment and be more expensive to finance due to factors such as inadequate insurance coverage and higher delinquency rates on HOAs.
All of these factors make buying a condo more involved than buying a house. You should enlist the help of an experienced real estate professional as well as a lawyer before entering into any agreements with the seller.
Ocean City Real Estate Lawyers at Oliveri & Larsen Provide Experienced Legal Counsel to Condominium Buyers
For help with any real estate transaction, contact one of our Ocean City real estate lawyers at Oliveri & Larsen. Our experienced real estate lawyers will work to resolve any issues quickly and reasonably. Call us at 410-295-3000 or contact us online to schedule an initial consultation. Located in Annapolis, Maryland, we represent clients in Ocean City, Anne Arundel County, Baltimore County, Baltimore City, Calvert County, Harford County, Howard County, Queen Anne’s County, St. Mary’s County, Worcester County, Kent County, and the upper and lower Eastern Shores of Maryland.