The basics of Condominiums (Condos) on the Texas Coast
The single-family detached home with a yard isn’t everyone’s American Dream. In high-priced markets with space at a premium, the only affordable solutions for some buyers are condominiums and townhouses.
Condominiums and townhouses are forms of attached housing, homes that share common walls and communal areas with neighbors. This type of housing is popular and essential in pricey real estate markets in which only a small percentage of households can afford to purchase a home. Condominiums are beginning to proliferate in less-populated areas, too, as an alternative for retirement housing for active adults.
Single unit, most often resembling a more superbly finished apartment. Found in complexes large and small, high-rise, or low-rise. The owner has title to the interior space of the unit and shared title to communal areas in the complex. Condominiums are governed by a condominium board of directors (voted by residents) in accordance with bylaws and covenants, conditions, and restrictions.
Two-floor unit sharing common wall with at least one other townhouse. Townhouses are commonly found in clusters (rowhouses). The owner has title to the unit and land under unit, and shared title to communal areas (if any). Some ownership arrangements more closely resemble those of condominiums. Town houses are governed by homeowner association (voted by residents) in most cases.
Know your documents
Before you buy a condominium, you’ll want to bone up on the project by yourself or with a real estate attorney. There are several documents you’ll want to go over with a fine-tooth comb before you sign any kind of purchase contract. These papers should be available from the condominium’s board of directors or their representative. They include:
Master deed: The key document in a condominium project, the master deed establishes the project as a condominium project. It gives residents the authority to form an operating association and gives the legal descriptions of all individual units and communal areas.
Bylaws: These can become sticky in heated board of directors’ discussions. Bylaws are the operating rules for the condominium association. Among other things, they authorize a budget to be created, the assessment of fees, the hiring of professional management staff and other operating duties.
House rules: These also can become sticky when owners disagree. House rules govern what owners can do in shared areas.
Covenants, conditions, and restrictions: Private restrictions on the use of project property; usually created by the developer.
Purchase agreement: This is like a standard purchase. It should include a cooling-off period during which you can back out and financing and inspection contingencies. Other papers: Current operating budget, current and proposed assessments, financial statement of the homeowner’s association and any leases, contracts, blueprints, or other design plans.
Condominiums may offer maintenance-free homeownership, but not all condominium projects are nirvana. Take the time to check out the complex before you buy and look out for these red flags: If more than 50 percent of the units are rentals, think twice about the project. Upkeep may be poor, and some lenders will not make a loan on a unit in the complex, which could reduce the long-term value of your investment.
If the condominium association doesn’t have a health reserve fund, beware. If there isn’t money to fix major items such as a new roof or plumbing, the members will be hit with a special assessment to pay the tab.
Avoid a condominium association in which the board of directors isn’t getting along. They will make poor decisions for everyone else despite one another. Avoid a condominium project that is heavily involved in litigation. Lawsuits from builders and other homeowners can put a cloud over the project.