If you have decided to retire in a condominium community so you won't need to do any more yard work or major repairs outside of your home, then you need to clearly understand the additional financial aspects that come with condo living. Since condominium communities are owned entirely by their residents, all of the costs associated with upkeep and maintenance are split between the owners. For this reason, it is vital that you take these financial issues into consideration before making a purchase offer:
Condo Associations Pay for Maintenance and Upkeep with Your Monthly Maintenance Fees
Unlike living in an apartment or single-family home, condominium associations require that you pay them a monthly maintenance fee. This fee is used to cover:
parking lot paving
In addition, if you purchase a condo in a high-end building with a receptionist and security then your fees cover these expenses as well.
Condo Associations are a Joint-Financial Commitment with the Other Owners
Before buying a condominium, you must understand that doing so is a financial commitment with the other owners. Since the existing owners have been paying their maintenance fees each month, it is important that the association itself is correctly managing those funds. There should be a reserve fund for unforeseen repairs, and the association should be well managed.
Before making a purchase offer on a retirement condo, first, obtain a copy of the financial statement of the association and make sure there are adequate funds in reserve. If it appears that the association is not in a good financial position to cover unexpected expenses without issuing special assessments, then you should purchase elsewhere.
Condo Associations Sometimes Must Issue Special Assessments
Sometimes a condominium association will need to make an unforeseen major repair that requires additional funding from the owners. For example, if there is a major problem with the underground plumbing, the building's foundation, or the roof, then the association will need to quickly raise the funds. The way the funds are raised is by issuing a special assessment to each owner.
Sometimes special assessments are in the thousands of dollars and you will be expected to pay them in a reasonable amount of time. If you do not pay a special assessment, then your condo association can foreclose on your home! This is important to understand, because you need to be able to cover these costs if you choose to purchase a retirement condo.