The Perils of Going Condo

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Purchasing a condominium is a popular choice for homebuyers of all ages who wish to dispense with the expensive and seemingly endless responsibility of maintaining a home. Although living in a condominium may allow for some to enjoy a more relaxed lifestyle, there are potential legal hassles involved in buying a condominium that can often make the transaction more complex than buying a home.

Know the Laws Regarding Condo Ownership

In Pennsylvania, as in most states, there is a statute that addresses specific requirements of condominium ownership—i.e., The Pennsylvania Uniform Condominium Act. The essential purpose of the law is to require the original seller of condominium units (often the builder or entity associated with the builder) to fully and accurately disclose the characteristics of the condominium units being offered for sale. This is accomplished by providing the prospective purchaser with a Public Offering Statement. The Public Offering Statement typically discloses a description of the condominium, number of buildings/units, a description of the common elements, list of common expenses and maintenance, the purpose and manner of operation of the condominium association, a description of the declaration, taxes, title and a host of other issues surrounding the creation and maintenance of the condominium.

ALWAYS Review Bylaws & CC&Rs of the HOA

In addition to the Public Offering Statement, a condo purchaser, upon giving a deposit, usually receives the Agreement of Sale, Declaration of Condominium, By-Laws of Association, and Rules/Regulations of the Condominium Association. It is imperative that these documents be reviewed prior to executing the Agreement of Sale (or within the time-frame allowed for canceling the Agreement of Sale if permitted by the purchaser’s particular state statute). Why? They provide significant detail about a variety of issues such as: permissible use of the property, calculation of condo fees and assessments, the cost of certain options and upgrades to a particular unit, calculation of taxes, environmental concerns, etc.

Often times, there are specific restrictions regarding re-sale of a unit and rules concerning home improvements. I currently represent one client who was told by the builder that she could not re-sell her unit because only 50% of all units have been sold at this time. Another client is being threatened with fines by the condo association because he installed hard wood floors in violation of a rule that requires all units to be 80% carpeted. Unfortunately, these clients failed to thoroughly read or have an attorney read all of the pertinent documents previously mentioned.

If you do not read these documents and subsequently violate the rules and regulations of the Condominium Association, you can bet that swift action will be taken in the form of fines, penalties and potential litigation. Most, if not all, Condominium Associations will even secure a lien against your property if the dispute lingers and you fail to pay your fines and assessments.

Suddenly, your comfortable life-style of condo-ownership will have quickly lost its appeal.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.