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Do Research On Condo Groups

Purchasing a condominium may be the first significant financial decision a home buyer makes. While the location, building design and amenities are important, there are also several financial and legal aspects to consider before making the commitment. In condominium living, that commitment includes not only the purchase of property, but also automatic membership into an association.

The information you gather before the purchase will help you create a complete picture of how the association operates. You should become familiar with some of these nuances and learn what makes this transaction different from the purchase of a single-family home.

Several key issues can be addressed through the written contract you will present to the seller. The contract should include a clause or be attached to a separate document, called a rider, that asks the seller for certain documents. Through these documents, you can learn about the association’s financial picture, whether any legal action is pending against the association or the individual unit owner, and whether the association bylaws prohibit certain pets, for example.

Illinois law requires the buyer to ask the seller to produce the following documents:

Copies of the association declaration, bylaws and rules and regulations;
A list of any liens placed against the unit;
A statement of the account that details the amount of unpaid assessments and charges owed to the association;
Capital expenditures expected by the association within the current or succeeding two fiscal years;
The status and amount of reserves, both for replacement and for specific projects;
Statements of the association’s financial condition for the last fiscal year;
Status of suits or judgments in which the association is a party;
Details on the insurance coverage provided;
Improvements or alterations made by prior unit owners to unit or limited common elements, which are in good faith believed to be in compliance with the condominium rules and regulations.

(Please note this law applies to condominium associations and not town house and homeowners’ associations, even though they operate in a similar fashion.)

These documents will create a picture of how the association is managed and how owners’ monthly assessments are being spent. Does the association have adequate insurance to cover replacing the condominium building in the event of fire, theft or other damage? Given the age of the property, have reserves been accumulating to cover routine maintenance projects, as well as more significant planned improvements? If the answers to these questions are no, it could be a financial liability to the owner.

The association’s declaration and bylaws will help you understand what type of activities are permitted in the complex. Are unit owners allowed to leave trailer trucks or motorcycles outside? Are pets allowed and, if so, are there weight restrictions? If you have a 75-pound dog or want to buy the unit as an investment to rent out, these documents could dramatically change plans.

By doing research before you purchase, you can save yourself from surprises and focus instead on living your new life as part of a condominium association. After all, association membership is not a privilege, it comes with ownership.