Due diligence on condo purchase

[Au revoir, Gopher]

My youngest is entering the real-estate market and looking to buy a condo. I have never had anything to do with the condos so I'm not sure what to suggest to him for due diligence... how does one check up on a condo, the board, maintenance, etc. I'm not sure your average "home inspector" will be of much help.

ARG

[omega50]

When we moved the MIL into a condo from her house we took a tour with the realtor and were joined for the tour by the office person. As we met other residents on the tour , I left my wife with the realtor and condo rep and approached and drew a few residents aside and asked those exact questions.

Not officially a seniors building a common theme seemed to be that although they were listed for sale, many still had to clear probate before they could be released.

[2 Tollers]

Either the realtor or the lawyer will request a review of the Condo Corporation statements. This would include a look at the reserve fund, any outstanding levies, common area expenses, any actions against the condo corporation, judgements, if there have been any special assessments,what the operational costs are, what condition the balance / budget is in,any assets the corporation has and the last audited financial statement. There could be comments based on the balance sheet and reserve fund on whether a special assessment could be anticipated.

The reserve fund is important and there should be comments on when the last review was done and the next one planned for. You should ask for what the reserve fund review has identified as the next major maintenance items. Also as the maintenance will be contracted out does the maintenance contractor provide a year end report and is this available for review.

It will be an accounting type document and tough reading

[Getzcold]

Get all the meeting minutes and review. If there is any big maintenance or special levy’s coming up you will have a idea. Also make sure they have a decent contingencies fund for the size of the place. Pools are nice but they cost a decent amount to run and repairs are cheap either.


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[Trochu]

Originally Posted by 2 Tollers

It will be an accounting type document and tough reading

They are the worst. I hope to never see one again in my life.

[Hamsnacks]

I'd also see if you could talk with the property manager, friend of mine bought a condo and everything was good. Finally met the property manager when he was moving in and she was a total snob. I wouldn't buy a unit there strictly because of her, if you don't get along I'd avoid the place.

Also look into if they have any dumb rules they enforce, used to live in an apartment that would require you to tell them if you ever needed to use the elevator for moving something, I understand if you're moving the whole day but if I buy a couch or table and use the elevator and didn't give you a heads up, don't think it's a big deal, especially if the total move is going to take 10 mins tops.

Everything the members mentioned above though is priority and very important!

Good luck

[jstubbs]

Talk to realtor, then RE lawyer for actual professional advice.

[expedition]

Originally Posted by omega50

When we moved the MIL into a condo from her house we took a tour with the realtor and were joined for the tour by the office person. As we met other residents on the tour , I left my wife with the realtor and condo rep and approached and drew a few residents aside and asked those exact questions.

Not officially a seniors building a common theme seemed to be that although they were listed for sale, many still had to clear probate before they could be released.

Another option is to return unannounced and introduce yourself to the neighbors.

[Red Bullets]

Bad investment. Condo fees and property taxes will chew up money.

Just the condo fees (480 per month) and the condo property taxes (230 per month) on a family member's condo total over 8K a year. That's on top of any payments on the condo purchase or utilities. And it turns out that many things insuite that may go wrong are still the responsibility of the condo owner. Like inline thermostat controls, etc..

Much smarter to buy into a home and lot. Better yet buy 80 acres with a home and the land rented out will pay for the utilities and property taxes for the year.


This might be of interest..

https://www.cmhc-schl.gc.ca/en/buyin...m-buyers-guide

[mattthegorby]

Originally Posted by 2 Tollers

Either the realtor or the lawyer will request a review of the Condo Corporation statements. This would include a look at the reserve fund, any outstanding levies, common area expenses, any actions against the condo corporation, judgements, if there have been any special assessments,what the operational costs are, what condition the balance / budget is in,any assets the corporation has and the last audited financial statement. There could be comments based on the balance sheet and reserve fund on whether a special assessment could be anticipated.

The reserve fund is important and there should be comments on when the last review was done and the next one planned for. You should ask for what the reserve fund review has identified as the next major maintenance items. Also as the maintenance will be contracted out does the maintenance contractor provide a year end report and is this available for review.

It will be an accounting type document and tough reading

If you are like me, I do not have the background to properly evaluate the documents. Speak with your realtor and seek recommendations on a pro to review condo docs - this may be a required step for a mortgage approval.

Reviewing the documents requires not only an understanding of what they say, it also requires a specialized knowledge of maintenance requirements/expenses and cycles for that type of building. A pending special assessment can spell financial ruin. Condo boards can be motivated to not be addressing special assessment issues on the meetings as having record of this in the minutes could negatively affect their property values. I have friends who bought into a situation like this.

[Kim473]

Some condo's you can't do anything to the inside or outside without there approval. My mothers 1/2 duplex style she could do anything she wanted on the inside but not on the outside. A friend of mine can't do anything at all without approval, that's why he wants to move. He Can't even hang a tv on the wall. His wife is now wanting to move to a acerage after this condo, she protested that idea for years before.

Compare fees and contingency funds with others out there before purchase. You don't want to buy one with little funds in the bank and some major reno's have to happen, then your on the hook for some major increases towards the fund to cover the repairs. My buddies condo fees are almost the amount as my mortgage.

[CaberTosser]

I’ve known a few people who were frustrated by their condo boards, some were not allowed to redevelop their basement in their townhome. What possible objections could be had to a laundry room improvement and a basement bathroom? To me it’s utterly ridiculous to own something yet have to ask permission of others to do things to your own place. Some boards are fine but some boards tend to attract people with power complexes who like wielding their influence as thought they were the dictator of a middle eastern or Central American nation. I’m guessing that these people keep getting re-elected due to owning enough units that they hold a balance of power.

I’ve done lots of condo maintenance contracts and some places have absolutely nightmarish mechanical systems, be it from bad installations or bad engineering or a bit of both. There are some towers in Calgary’s Beltline area that I would not recommend to anyone du to the weekly leaks I would attend suite by suite. Sometimes I would be there on the common leak and would have to go to other suites for the same leak (excess velocity in the combined heating / domestic water system wearing through the pipes). They would not do anything about the base problem, just patch the symptoms.......... then patch the drywall, then the trim carpentry. Lather, rinse, repeat. And the leaks were always in the ceilings of the closets that also housed the modem/Wifi gear.

[mattthegorby]

Originally Posted by CaberTosser

I’ve known a few people who were frustrated by their condo boards, some were not allowed to redevelop their basement in their townhome. What possible objections could be had to a laundry room improvement and a basement bathroom? To me it’s utterly ridiculous to own something yet have to ask permission of others to do things to your own place. Some boards are fine but some boards tend to attract people with power complexes who like wielding their influence as thought they were the dictator of a middle eastern or Central American nation. I’m guessing that these people keep getting re-elected due to owning enough units that they hold a balance of power.

If you can't beat 'em join 'em!

The condo board I was on for 4 years was often seeking new members. A somewhat thankless job, but you could have a significant say on the direction the building is taking. You also have insight into all the challenges the condo faces that drive the rules with crappy owners, vandelism, theft, etc... Not to say that some of the rules are not wacky - I had disagreements with other board members on unit modifications for sure!

[CaberTosser]

I had read some news articles about how some people had been getting themselves elected to condo boards despite neither living in or owning units it the buildings. Their angle was to get themselves installed and then milk the maintenance funds for all the money that they could. I think this was in Toronto.

[mattthegorby]

Originally Posted by CaberTosser

I had read some news articles about how some people had been getting themselves elected to condo boards despite neither living in or owning units it the buildings. Their angle was to get themselves installed and then milk the maintenance funds for all the money that they could. I think this was in Toronto.

That is pretty shady... I wonder if they convinced owners to allow them to act in their place? I know that this is often done so tenants can be on the board.

[M.C. Gusto]

I’ve got two friends who are currently having to pay 50K on top of the purchase pric due to unforeseen conditions fees on relatively new units. The condos boards were unable to get any money from the builders and in turn their building price has plummeted and theyre stuck unable to leave. Both say they would never buy a condo again.
I recommend a townhouse

[midgetwaiter]

I would not buy a condo in Alberta under any circumstances. My best friend owns a unit in Calgary where the building required over $4,000,000 worth of repairs when it was only 7 years old due to poor workmanship and the owners were stuck paying. He personally had to come up with just about $100k.

https://www.cbc.ca/news/canada/calga...ills-1.1264358

It's not a unique story either. There was a whole complex evacuated in Ft Mac on 15 minutes notice a few years back. People spent years paying mortgages on a place that condemmed before it all wound up.

https://www.cbc.ca/news/canada/edmon...wood-1.4637788

Until the governments involved show that they have even a sliver of ability to hold builders accountable a condo is far too risky IMO. It's not that a single family home is risk free but the added complexity of dealing with condo boards and a whole group of desperate owners is just brutal. The toll this ordeal took on my friend and his family was heart wrenching to see.

[D4l3k]

I got into a condo when I was younger
Worst mistake of my life, I will never own shared property ever again in my life

After 3 years, our condo board sued the builder for deficiantcies, (law suit still going on after 12 years later at over a million dollars of cost for the owners)

Then the special assessments began coming in

Unexpected bills for 5g, then another for 3g half a year later

Then someone left a cig in a potted plant...

Long story short, no access to our building for over 2 years and over 3 years to fully repair and 33 million dollars of damage repaired, and half the owners going bankrupt (1 even committed suicide over it)

Another special assessment for 3g for costs insurance wouldn't cover...

Finally sold it, took a 20% loss but lessoned learnt
Many of the people I knew there lost much more then me

[HalfBreed]

Own one in Victoria. It's older so built exceptionally well, less than 6 floors and concrete/steel due to fault potential.
Ensure you know how much is in 'the fund' as well as knowing what structural improvements will be done. New decks affect all owners, even the grounders that have no deck. Roof is always critical. My dad lives in mine and is active in meetings.

Always be informed if you do not own the building or land.

Edit to add, not on Native Claim.

[midgetwaiter]

Originally Posted by HalfBreed

Own one in Victoria. It's older so built exceptionally well, less than 6 floors and concrete/steel due to fault potential.

I’d feel a bit more comfortable in BC, they made a bunch of changes in the wake of the leaky condo fiasco that gives owners some protection. At least the builder has to have a warranty underwritten rather than your board trying to sue a shell company with no assets like happens so often here.

[HalfBreed]

Originally Posted by midgetwaiter

I’d feel a bit more comfortable in BC, they made a bunch of changes in the wake of the leaky condo fiasco that gives owners some protection. At least the builder has to have a warranty underwritten rather than your board trying to sue a shell company with no assets like happens so often here.

I seem to believe leaky had more to due with land ownership than bad walls, I'll leave that to the Builders. Ownership should be clear across any board. Rule of Law so to speak.

[R3illy]

your closing lawyers only concern will be to transfer money. I had a major issue on closing that my lawyer didnt catch for a condo. His excuse was he wasnt paid to verify that....

Review the condo docs yourself. The condo check companies are useless. Check the reserve fund yourself to see how on track things are. Have the sellers provide proof the condo was properly measured. Condos are notorious for having the wrong square footage listed.

Personally im not a fan of condos even tho i own a few as rentals... id go a different route having gone through all i have. Feel free to pm if theres anything you want to ask.

[R3illy]

Originally Posted by D4l3k

I got into a condo when I was younger
Worst mistake of my life, I will never own shared property ever again in my life

After 3 years, our condo board sued the builder for deficiantcies, (law suit still going on after 12 years later at over a million dollars of cost for the owners)

Then the special assessments began coming in

Unexpected bills for 5g, then another for 3g half a year later

Then someone left a cig in a potted plant...

Long story short, no access to our building for over 2 years and over 3 years to fully repair and 33 million dollars of damage repaired, and half the owners going bankrupt (1 even committed suicide over it)

Another special assessment for 3g for costs insurance wouldn't cover...

Finally sold it, took a 20% loss but lessoned learnt
Many of the people I knew there lost much more then me

Was this the hamptons condo in edmonton?? When i bought a brand new investment condo i liked this new build in edmonton but the sales people were the worst ever. 8 ys later it burnt down in the midst of a major lawsuit against the builder.

I knew a few people who lost a lot in this condo.