When you buy a condominium you’re really getting two things when the title gets transferred to you – a piece of real estate and a piece of a business.
The guts of what makes a condo different than a free-hold property is the condominium corporation. Because there’s your property is broken in two – your property and the common property – someone has to take care of the common property. Usually you own from the drywall in, while the condo corporation, via the board, takes care of the siding, the roofs, the walks, lawns, parking and other buildings.
The condo corporation is a corporation and business like any other. It takes in revenue, spends money, maintains savings and has to keep track of what money is going where and what’s likely going to need to be fixed.
What is absolutely vital to buying, owning and selling a condo is the package of documents that we casually call ‘condo docs’.
You must receive, read, maintain and pass on a complete package of documents. Usually we just buy them when we’re ready to sell and send them over to the buyer, who seldom actually look at them. They’re then shocked when they receive the same letter I did – a special assessment for $28,000. There’s another condo deal I’ve been involved with as a Realtor where they’re a potential $100,000+ special assessment that’s already been clearly discussed in the minutes. The current owners were shocked to find this out and you can imagine something like that would throw the deal a little sideways, besides reducing the value of their unit.
Make sure you have a complete set of documents. Read the minutes when you get them. Attend the AGM’s and actually look at the statements and reserve fund studies. You bought part of the business and you’ve got to be a part of it.
As a buyer you should be looking at theses documents, but is there another party who is supposed to look at them as well? Your lawyer? Your lender?
Great question! I use the Calgary-based company Condo-Check to review docs for me, but lots of people use their Lawyer. Realtors can be helpful answering questions, but shouldn’t be doing document reviews for you.
As an employee of a document review company: Lawyers often send condo docs to be reviewed by a document review company. Lawyers have said that they feel that though they can review the legal portions of the documents, they are not specialists in reviewing the financial health, the property management or functioning of the corporation.
A document review company looks at every aspect of the corporation from a third party unbiased point of view.
Why send documents to Calgary for properties in Edmonton when CondoQuest was born here in Edmonton? Developers, Reserve Fund Engineers and Management Companies have reputations that are local and personal to the Edmonton market. CondoQuest operates based on ‘local’ market trends and has access to consultants who are also locally based!
I use Condo-Check as well, I would not hesitate to recommend them. They have been both diligent and courteous for us.