Questions to Consider When Purchasing a New Condominium

New condominium developments have popped up all over Sarasota and Manatee counties in the last year with more scheduled in 2015/2016.  Many times prospective buyers not only have questions regarding the real estate contract but also associated condominium documents (e.g., Declarations, Articles, Bylaws, Budgets, Rules and Regulations, etc.).  Below is a non-exhaustive list of questions to consider when buying a condominium in a new development:

• What is the reputation of Builder and Developer?
• Is the entire project or a portion of the project bonded?
• What amenities are included?
• What is the actual square footage of the Unit?  Note, there generally is a difference between the architect’s and engineer’s numbers.
• What are the Association fees?
• Are there multiple Associations?
• Did you receive and review a copy of the Budget?
• Are there any outstanding debts owed by the Association?
• Are there Reserves?
• What is the percentage of owners who are not paying their dues?  Note, high delinquencies will make it challenging for a buyer to obtain a federally backed loan.
• What are the use restrictions?
• What are the leasing restrictions?
• What are the pet restrictions?
• Does the Unit come with parking and/or a storage unit?
• What are the resale restrictions?
• Does the Buyer have to be approved with the Association before acquisition?
• Are there too many investors?  Note, too many investors may impact a buyer’s ability to get a mortgage.
• Is the project an “approved condominium” with Fannie Mae?
• Is an initial capital contribution required at closing?
• Is the Buyer or Seller responsible for closing and title fees and other costs?
• Are financing contingencies allowed under the contract?
• What is the total deposit required under the contract?
• Will the Developer use a portion of the deposit toward construction related expenses?
• What warranties are being offered by the Developer?
• Did you or your insurance agent review the Associations insurance coverage?

As always, should you have any questions regarding the foregoing, we urge you to consult with your real estate attorney.

Sincerely,

Berlin-Patten, PLLC