Living in a condominium is not for everyone yet many people prefer the condominium lifestyle. Some people would prefer living in a single family home however they can only afford to purchase a condo. When buying a condo is a buyer’s only option they are at least still afforded the opportunity for home ownership. While they may live with restrictions and rules, in many cases, especially in San Jose and Silicon Valley, condo owners build equity and over time may be able to afford to buy a single family home. For many, it is a better alternative then renting.
Many people, including real estate agents, don’t know the difference between a condominium and a townhouse. Many real estate agents list and market a townhouse style condo as a town home when it is legally a condominium.
Condo owners are said to own the “air space” within the walls of their condo unit. Owners are responsible for maintaining “walls in”. Owning land is not part of the equation.
Generally the condo association is responsible for maintaining “walls out”. Condo ownership is clearly defined in the legal description. Who is responsible for what as well as what condo owners can and cannot do can be found in the CC&R’s and other governing documents. The ‘common areas” within a condo community are jointly owned and shared. Legal descriptions will define ownership of the common area as well.
Condo owners are required to pay monthly dues. The dues cover maintenance, management, and reserves. Dues will vary depending on the size of the complex as well as the amenities such as pools, spas, club house, tennis courts, exercise rooms, elevators, etc. Gated, golf and guarded communities tend to have higher premiums. The amenities are among the many considerations in purchasing a condo. One may be paying for amenities they will never use.
Condominiums are managed by a management company and have a governing board comprised of home owners who reside within the community. One thing to consider regarding the board members is that they are effectively managing a Corporation. Board members may or may not have any business experience at all and yet they are making decisions on behalf of the entire community.
Living in a Condominium is Lifestyle Living
Among the desirable features of living in a condo is the fact that homeowners are not responsible for such things as gardening, exterior painting, lighting, replacing the roof, in many cases fixing things like dry rot and remedies for termites. In other words, all the work and maintenance outside the walls of their unit.
Covenants, Conditions & Restrictions
There are many different condo styles. The one thing they all have in common are Covenants, Conditions & Restrictions, affectionately referred to as “CC&Rs”. The CC&R’s outline what homeowners can, and cannot do. Some condo communities have very strict CC&R’s and others less so. Buyers definitely want to carefully review the CC&R’s before removing contingencies.
Condo Communities Also Have Rules & Policies
Just as with the CC&R’s the Rules and Policies will vary as well. Examples of some policies are:
- How the meetings are run as governed by California Civil Code
- Policies for delinquent HOA dues
- Need approval of the Board for architectural changes such as replacing windows, adding air conditioning, installation of satellite dish.
- No hard surface flooring allowed above the first floor. In other words, in upstairs units where another homeowner lives below.
- What can and cannot be placed on decks and patios
- Storage of boats, trailers, campers, bicycles
- Posting of signs, including real estate signs
- Parking Rules, Illegal parking, the number of vehicles allowed
- Unleashed pets and noise caused by pets
- Pet restrictions limiting the size and number of pets
- Repairing vehicles in common areas not allowed
- Restrictions on holiday decorations and storage of children’s toys
- Pool and Spa Rules including number of guest permitted
Financing a Condominium
Very few condominiums are approved for FHA financing. That is very unfortunate because condos tend to be more affordable for many buyers who only qualify for FHA financing with 3.5% down payment. Lenders have their own lending guidelines they must follow and they must also comply with all other lending guidelines. The most common financing used to purchase a condo in San Jose and Silicon Valley is conventional financing. We do see a fair amount of all cash offers as well.
Because so few condo complexes are FHA approved, buyers with FHA financing will save their self a lot of time and frustration if they determine if the complex is approved before looking at condos for sale. The odds are certainly stacked against them. If a buyer does not know how or where to verify if a condominium community is approved for FHA financing then they need to ask the agent that represents them. If the agent does not know how to verify then a buyer may want to consider finding an agent that does.
