This is the third installment in our video blog series on Questions to Ask Before Buying a Condo in Andover and beyond. If you’re thinking about buying a condo in Andover or anywhere in Massachusetts, you’ll want to be informed on every aspect of the property before you purchase it. It’s important that you know just the right questions to ask to uncover any issues before you buy.
How much money is in the reserve account and how much is funded annually?
This question revolves around the money that is currently in the condo association’s capital reserves account and how much money is allocated to that account each year. A portion of the condo fee you pay when living in a condominium complex should go into a reserve account. This account is used to offset any major expenses that might come up during ownership in the common area elements.
How much money should be in the reserves account? It varies, I’ve seen some associations that have very little money in the reserve account, and I’ve seen other complexes that have plenty of money in reserves. What you need to find out is how much work the association is doing or not doing on capital improvement. Just because an association has money in the capital reserves account doesnt mean that they’re managing the property properly, and, just because there’s low money in the reserves account doesn’t mean that the association hasn’t used the money to do the capital improvements. So, you want to find out where they are with the money in the account and what their plans are for improving the property. Another way to dig deeper is asking if a capital reserve study has been done. This report will show you what some of the upcoming projects the association will be working on.
Keep in mind, all of this varies depending on the size of the condo complex. smaller 4-10 unit complexes may not have capital resever studies done, but they should have some money in reserves in the event of a major catastrophe. The larger associations that are run by management companies will typically have more formalized reserve studies done.
More Questions to Ask Before Buying a Condo:
1. What is the Condo Fee & What Does it Cover?
2. What are the Condo Rules & Regulations?
3. How Much Money is in the Reserve Account and How Much is Funded Annually?
4. Are There Any Pending Special Assessments?
5. Who Manages the Condo Complex?
6. Is the Condo Association Involved in Any Pending Legal Actions?
7. How Many Condo Units are Owner Occupied?
8. How Many Condo Units are Delinquent on Paying Their Condo Fee?
9. Do Condo Unit Owners Have Exclusive Easements or Right to Use Certain Common Areas?
10. What does the Condominium Complex’s Master Insurance Policy cover?
For over 30 years the Prime Property Team and Ron Carpenito of Keller Williams Realty Andover have been helping home buyers and sellers in Andover, North Andover, Haverhill, and the Merrimack Valley with their real estate goals. If you’re thinking of buying or selling a home anywhere in Massachusetts or know someone who is, contact Ron today at (978)494-0346.
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