Tips For Buying A New Condominium
Read these tips before buying a condiminium. Before signing any contract for a new condominium, which is harder to check out than an established condominium, buyers should study the prospectus for any of these pitfalls.
The prospectus includes a plan of the unit you are buying, showing rooms of specific dimensions. But the plan omits closet space. Result: The living space you are buying is probably smaller that you think.
The prospectus includes this clause: The interior design shall be substantially similar. Result: The developer can alter both the size and design of your unit.
The common charges set forth in the prospectus are unrealistically low. Buyers should never rely on a developer's estimate of common charges. Instead: they should find out the charges at similarly functioning condominiums.
Common charges inlcude: Electricity for hallways and outside areas, water, cleaning, garbage disposal, insurance for common areas, pool maintenance, groundskeeping, legal and accounting fees, reserves for future repairs.
Variation on the common-charge trap: The developer is paying common charges on unsold units. But these charges are unrealistically low. Reason: The developer has either underinsured, underestimated the taxes due, omitted security expenses, or failed to set up a reserve fund.
The prospectus warns about the seller's limited liability. But an unsuspecting buyer may still purchase a condominium unit on which back monthly charges are due, or even one on which there's a lien for failure to pay back carrying charges.
The prospectus includes this clause: The seller will not be obligated to pay monthly charges for unsold units. Result: The owners of a partially occupied condominium have to pay all operating expenses.
The prospectus makes no mention of parking spaces: Result: you must lease from the developer.
The prospectus is imprecise about the total number of units to be built. Result: facilities are inadequate for the number of residents.
The prospectus includes this clause: Transfer of ownership (of the common property from the developer to the homeowners association) will take place 60 days after the last unit is sold. Trap: The developer deliberately does not sell on unit, continues to manage the condominium, and rewards sweetheart maintenance and operating contracts to his subcontractors.