Buying a Condo? Research the Condominium Association Thoroughly

Are you a first time home buyer in the Chicago real estate market?  Do you have your eyes on a particular condominium in the desired Chicago neighborhood that you dream about living in?  With the $8,000 federal tax credit luring buyers out from the darkness,  property values at lows unseen in a generation, you feel like a fool if you don’t take advantage of this once in a lifetime chance at owning a piece of the American dream, right?  Well, if you feel secure about your employment and have a few bucks saved up, why then stop renting (or move out of Mom & Dads house!) and take the plunge and buy that Chicago condo!  Before you do, please, take it from my experience and do your research (exhaustively) on that boring, sometimes mystifying and unavoidably annoying thing called the condo association.
When my wife and I purchased our Chicago condominium in an old 7-flat a couple years ago, we found the building we liked in the neighborhood we liked.  We also took the seller’s / developer’s word that the association was “well funded”.  Mistakenly, we took that as being good enough.  Soon after we closed and moved in.  Once we met the neighbors we found out the dirty little secret almost immediately and my heart sank.   There wasn’t an association in place, there was no money in any account, we didn’t know the status of any of the common expenses balances and worst of all, none of the owners at the meeting seemed to think this was that big of a deal.
All the current owners were young professional types new to the recently renovated-converted apartment building.  We didn’t have a clue as to how to begin to get an association going.  Regretfully, lead by panic mostly, I volunteered to get to the bottom of it all and do all the homework / legwork to get the association up and running.  All we had were the Condominium Declarations and Rules and Regulations from the developer.  It was difficult, expensive and frustrating to say the least.
I will spare everyone the details of starting and maintaining an association. The fact is that you should take a lesson from my ignorance and think about the association immediately before you fall in love with that “perfect condo”.  If you have a Realtor working as your buying agent, make sure he or she gets a copy of all the financials of the building.  Have your attorney look at the balances and talk to the associations president directly and find out what’s going on in the building like any possible upcoming special assessments.  I cannot stress the importance of this research and “discovery” enough.  If the information isn’t “available”, move on in your search for your perfect condo.  Lord knows that there is a great inventory of existing and new condos available.
If you are looking at a new condo that doesn’t have an association formed yet, again buyer beware.  Don’t give up on new construction, but get the facts about the builder/ developer’s reputation and business practices.  Find out from Realtors and other property professionals in the area familiar with the developer.  Get references from previous development’s residents and find out how there transition to the new association went for them.  Be aggressive!  Just because a building is new doesn’t mean that there aren’t maintenance, insurance and operating bills to pay.  Remember too that the developer’s warranty is only as good as the developer.  And as we found out first hand, you can have large structural issues down the road that your association may have to pay for by getting additional funds through a special assessment.
Depending on the building’s size there should be enough to pay for a large catastrophe, such as replacing the roof.  Every month the association should be budgeting for recurring maintenance (such as painting the halls every other year, if you have a boiler for example, setting aside $200 a year for maintenance or replacement) and a safety fund for big, unexpected problems such as your roof.  If managed well, your building will balance these funds to keep your assessments at a reasonable level each month while keeping a healthy fund available for when you need it.
Here’s a brief article on what an association is and what questions to ask when you buy your Chicago condo:  (Click Here)