Single Girl Power Growing Influe

Steve Kent's October 2006 Newsletter

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Questions to Ask Before
Buying a Condo

By Stuart Lieberman

      Condominium ownership is becoming quite popular throughout the United States. They come in all shapes and flavors. It seems that the newest breed of condos are found in the urban areas. This is partly due to the trend towards urban renewal and redevelopment that is found in many portions of this country.
      When I talk about condominiums, I don't literally mean just those developments that follow a condominium form of ownership. I'm also talking about similar kinds of legal entities such as homeowners associations. The types of developments have different names in different states. However, the concept is often similar. Unit owners are responsible for and own the interior of the living spaces, often to the finished walls.
      The association is responsible for the areas beyond the finished walls, typically the structures themselves, the plumbing, the common sewer lines, etc. In addition, there are common elements that are controlled by the association. Typically, this might include pathways, recreation facilities, swimming pools, tennis courts, and anything else that is for the benefit of the association.
      Associations may have common areas and limited common areas. A common area might be something like what was described above: a park, an internal street, a pool. A limited common area might be a part of the lawn that's fenced off for the use of a particular unit owner.
      These are general observations. Before you purchase you must read the master deed, the bylaws and every other governing document to find out what you will own and what you will not own.
      The success of the condominium association is directly related to the caliber of the association. If the association board of directors is functioning properly and has good legal counsel and other professionals, then the entire community may be an exciting, desirable place to call home.
      On the other hand, if the association is falling apart, if nobody wants to volunteer, if it's not governed by capable, caring people, if it doesn't retain quality professionals, or it isn't properly collecting the monthly assessments from the unit owners, then the community probably won't be a desirable place to live. And people are probably not going to continue to live there.
      Another concern is the extent to which the condominium is owner occupied. If most owners rent the

units out, they may be collectively less concerned about day to day issues than if it is largely or entirely owner occupied. All of this means that when you purchase a condo, you can’t just look at the quality of the construction, or whether the heater works. You cannot just do the kinds of things that you would do if you are purchasing a private, single-family home.
      Above and beyond the normal kinds of things that you need to do, you absolutely must look at the condominium records and documents. Take a look at the minutes. Is this a properly run, stable organization? Are there constant resignations; does it appear that little ever gets accomplished?
      In reviewing the association documents, find out if they permit special assessments if there are one time large expenditures. The association should be able to special assess if problems arise. Watch for association documents that unreasonably restrict the right to special assess. While this restriction might seem desirable, in reality an inability to special assess can ruin a condominium development. Things that must get done might never get done properly.
      Ask whether the association has a functioning covenants committee? These are the internal volunteers who enforce the rules and regulations. Are they fair and reasonable people? Do they go out on a regular basis to ensure that the rules and regulations are being followed? Or is this the condominium version of the wild west where unit owners do as they please and are never asked to follow the rules.
      Rules are necessary in these communities and they must be fairly, even handedly enforced on a regular basis. In addition to a thorough document review, talk to people who own units. What do they have to say. Look around the development. Does it appear to be well maintained? Are their annoying signs posted everywhere suggesting dysfunction?
      There is no getting around the fact that due diligence in the case of a condominium purchase requires an examination of the Association records and legal documents. Examine them and ask questions before purchasing. I suggest having an attorney help you understand the association and its workings. This is an inexpensive service, and may prove down the road to be a very worth while investment.

      Ladies, take note, you've begun taking a larger role in the area of homeownership over the last few years, according to a new study from the Joint Center for Housing Studies at Harvard University.
      "Not only are unmarried women a large segment of the home buying population," says Rachel Bogardus Drew, the author of the report, "but they are fast-growing, too, increasing their share of home buyers by 50 percent in eight years. The value of their home purchases over a 3-plus year period totaled more than $550 billion ... ."
      The study is as much a report on the sociological changes in our country as on the buying practices of women. The continued breakdown of the family has pushed women to start fending for themselves, financially, instead of waiting for the combination of salaries with a mate to purchase a home.
      "Two out of three female buyers were previously married, though that share drops significantly for younger buyers," Ms. Drew points out. "They also have lower incomes than unmarried men and married home buyers, but are less apt to finance their home purchase." Still, the overwhelming buying segment is made up of married couples at 63 percent, but now unmarried women are the second highest buying group (at least when looking at marital status) at 20 percent in the last three years. Unmarried men make up 17 percent of the buying pool.
      The demographics paint an admirable picture of the group, being older than their unmarried male counterparts, and facing many obstacles, demonstrating their determination to get in the real estate ownership circle. They also have lower incomes and many of them are buying with children in tow (30 percent).
      Financially, they've demonstrated that even with lower incomes, homeownership is available. At $37,000, their median income is 11 percent less than single men, but account for why they are less likely than married couples to live in single family homes -- however, the majority of them were move up buyers in the last three

years. They are plodding along with wealth growth, taking a patient path to building their net worth by buying low, selling when the market grows and moving into a larger, more expensive dwelling.
      The growth of this demographic has not gone unnoticed, as both for-profit and not-for-profit entities have begun initiatives to help women in their quest for homeownership. One of the groups was the Women's Mortgage Industry Network (WMIN), which was launched four years ago and is sponsored by Freddie Mac. The group's goals include engaging "the mortgage industry and non-financial service providers in a targeted education and counseling campaign that it believes will help close the gap in homeownership rates," according to information from FreddieMac.com.
      One of the most interesting points of this report was one of the buying options Ms. Drew uncovered in her report of single women, purchasing in a co-housing community.
      "Co-housing communities, though relatively small in number -- about 50 in the U.S. -- are an attractive choice for women who want the privacy of their own home with the benefit of a supportive, surrounding community. These communities typically consist of 12 to 42 self-sufficient private dwelling units, but also include a common kitchen/dining space where meals are shared as well as communal outdoor space. Other arrangements help to pair single mothers looking for a shared living situation," she writes.
      "By pooling incomes single mothers can often afford to buy a more desirable home, and by living together they can share household tasks and childcare, which can free up valuable time. Living with someone can also provide critical emotional support and help make single parenting less exhausting and lonely."
      Obviously, this is a growing segment of the real estate industry and will continue its upward trend with the aging of the baby boom generation and the natural selection of women living an average seven years longer than men.

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