How many times have we heard from the people we know in our life to “be careful” when purchasing a home or condo? When it comes to real estate, everyone likes to be a expert. In my own experience, even being an expert didn’t protect me from some very costly special assessments in my condominium complex.
A special assessment is defined as–a fee approved by a homeowners association, a co-op or condominium board to cover items not provided for in the budget. When I purchased my waterfront condo in December of 2007, I didn’t pay enough attention to the most important items to review as a prospective homeowner; reviewing the re-sale cert. Had I done my homework, I may have noticed some warning signs. When you receive a resale cert the most important part of the whole document are the first 3-4 pages. It is simply a summary of everything important and relevant. In my experience, I actually did review that section; However, I did not review the last set of meeting minutes provided by the board.
In those minutes, I would have noticed the urgency that our board had in getting a reserve study done. There were nervous homeowners that wanted to know the condition of the roof, our storm drain system and the overall life of the siding. From the exterior, the building looked fine to me. The grounds were well maintained and I thought I had very little to worry about. Here we are, just 2 years later and our board has asked for $5,000 dollars per owner. This was a surprise to me and a very unwelcome one at that. You can see the exterior siding that needs to be replaced. In addition, there are some rooftops that are being replace as well.
No one like news of unexpected bills. It will be an expense that I will never forget. My message to you is that you need to review the re-sale cert thoroughly. It is important to have either an attorney or your real estate advisor help you through that process. In my situation, I should have caught it myself. With that being said, I try not to be so hard on myself. We love our home and probably would have purchased it anyway. The lesson I learned is that there is never “too much” attention to detail. It has made me a better person and a better advisor for my clients.
As always, please feel free to e-mail me with questions at jreynolds@urbanimg.com
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