Lofts, Condos & Townhouses

If you buy a townhouse or condo in Minnesota there is a ten day rescission period. That means you have ten days to read the condo documents including rules, bi-laws and financials. Some condo associations will even share meeting minutes from home owner association (HOA) meetings.

A buyer can cancel the purchase with no penalty if there is something in the HOA documents that isn’t acceptable. Over the years I have had a few buyers cancel a condo purchase because of rules like pet restrictions, rental restrictions and other restrictions on how the unit can be used.

Sometimes the HOA doesn’t have adequate reserves to cover maintenance or unforeseen repairs. Which means owners may receive large assessments to pay for repairs.

Maybe the HOA dues are just too high.

It is important to understand that it is the buyer who needs to read and understand HOA documents and that any questions should go directly to the HOA. Seller’s do not always have the facts and real estate agents should stay out of it. Everything is in writing from the association.

NEVER rely on what a real estate agent or a condo owner says when it comes to anything that the HOA controls. Go directly to the management company or designated member of the HOA board of directors. Get everything in writing.

Buyer’s agents and listing agents should refrain from answering questions or acting as a go between when the buyer is doing due diligence. Some real estate agents get too involved. Seller’s should always direct questions to the association.

Agents may assist their clients by providing phone numbers and email addresses or forwarding documents to the buyer but should not be answering questions for the association.

Before deciding that the monthly association dues for a condo or townhouse are too high, find out what they cover and do some comparisons.

I don’t pay association dues, but it costs about $110 a month for homeowners insurance and another $25 for trash pick-up but that doesn’t include the part we pay through our property taxes. Water is about $53 a month. Add that up and we are already at $188 a month for items that are typically included in association dues.

We had the place reroofed a few years ago that cost several thousand dollars and is typically paid for with association dues. There are other items that are covered like snow removal and lawn care.

Some associations cover heating, cooling, cable and internet which can easily add up to another $300 a month.

People who live in condo buildings with underground heated garages pay for it through their association dues.

Some condos owners enjoy shared amenities like balconies, decks, swimming pools, party rooms, and exercise rooms with equipment. There might also be a library, a craft room and maybe a guest apartment.

Owners also pay for security access, professional management, mail rooms, laundry rooms and elevators. It all adds up.

People who do not want to pay for all of the amenities might be able to find a condo with fewer amenities and lower dues. Either way it is important to understand what the dues are paying for and to make some comparisons before deciding that association dues are too high. It is even possible that living in an association will be less costly than owning a house or renting an apartment.

ICondo buyers receive disclosures and financial statements from the homeowners association before they buy a condo. It is a state law. When they go to sell the condo and request condo documents for the buyer they will have to pay hundreds of dollars for them. If they want the documents in a few days they will pay fees to expedite them.

Owners will pay fees at closing for documents from the association needed for the closing. They may also pay more to have those documents expedited.

These fees are a surprise to the owners because they don’t find out about them until they go to sell.  The fees are not negotiable and owners are forced to pay if they want to sell, so they pay and move on.

Are they junk fees? Often the documents are all electronic and accessible through the Internet. Back in the bad old days, they were printed documents. Sometimes many pages in large plastic three-ring binders. Charges for paper documents make sense.

Condo owners should have a plan for getting all of these documents so that they do not have to pay even more to expedite the process.

Buyers have ten days to review the documents before committing to buying the condo. The ten-day recession period doesn’t start until the buyer gets the documents.

How expensive are your condo documents? How easy is your association or management company to work with when it is time to sell?

This just in from Minnesota Realtors:

“Housing Market Cools as Closed Sales Decline

While looking for a condo for one of our clients I encountered several with pet restrictions. Pet restrictions are common and variable. Some condos prohibit pets and some allow cats but not dogs and some will allow cats and dogs with height, weight, and or breed restrictions.  There are number limits too.

In one building the only pets that are allowed are fish. I also know of some townhouses that allow any kind of animal except for birds.

When there are height and weight limits for dogs I generally call the association or the listing agent or both and do my best to determine what those limits are.  More often than not those limits do not even exist, yet they remain in the MLS as restrictions.

That means some interested buyers with pets won’t even consider the unit which makes the pool of buyers smaller and ultimately means the unit will take longer to sell and sell for less money.

People who are selling units that are part of an association should find out exactly what the rules are and make sure that the information for Realtors and buyers is accurate and up-to-date.

Recently I have seen more associations that have “breed” restrictions for dogs. So far no one has been able to tell me which breeds are not allowed which could be problematic if it is on a case-by-case basis.