In New York City, condos offer great opportunities for homeownership as well as a valuable investment. However, when you buy a condo in NYC, the process can feel daunting, and you should consider potential pitfalls before starting your search.
Condos are managed by a board of directors composed of unit owners who oversee the general operation of the building. The upkeep, expenses, and insurance for the building rely on regular monthly or quarterly fees paid by all unit owners to the condominium association. The board typically contracts with a management company that collects maintenance fees and handles the day-to-day management, accounting, and upkeep of the building.
Before you buy a condo, consulting an experienced Manhattan condo real estate attorney can help you avoid mistakes and maximize the benefits of your purchase. At Sishodia PLLC, our experienced attorneys can provide you with the legal support you need when buying a condo. Our team understands the challenges involved in purchasing a condo in New York, including the potential disadvantages of owning a condo. Contact us today at (833) 616-4646 to schedule a consultation.
Here are a few red flags to consider before purchasing the condo you are interested in.
What Are Some Red Flags When Buying a Condo?
Red flags when buying a condo include high HOA fees, poor building maintenance, low reserve funds, ongoing litigation, and unclear rules or restrictions. Review the condo association’s financials and board meeting minutes, and inspect the condition of the common areas before purchasing.
Condos with Poorly Maintained Common Areas
When purchasing a condo, you are not only buying the unit itself but also a proportionate share of the building and all the common areas and amenities. You will want to ensure that the building that your unit is in is properly taken care of and well-maintained. Buildings that are poorly maintained often have other problems under the surface and can lead to more significant issues down the road, so they may not be the best option for you.
Building Construction Issues are Red Flags when Buying a Condominium Unit
You will want to look closely at the construction of the inside of your unit as well as the building itself. Developers who cut corners are gone after the building is sold out, leaving their poor construction problems to the people who are now owners of the building.
Condos with Very High Maintenance Fees May Not be the Best Option
The association must keep a full accounting of all the costs and expenses regarding the building’s upkeep and maintain a budget. If maintenance payments seem unreasonably high, there may be issues with who is overseeing the budget and how maintenance money is being spent. Condos with this kind of issue are not the best option since this can bring problems in the long run.
Condominium Units With Very Low Maintenance Fees May Also Not Be the Best Option
Conversely, when maintenance fees seem too low, it may indicate that there may be a shortfall when needed. Condominiums are required to keep reserves for these reasons. If there is an emergency and there are no funds in reserve, the residents will be left to make up the difference through special assessments. Condos that don’t seem like they are maintained very well can pose risks and significant issues to their buyers in the future.
Residents Who Are Not the Best at Paying Their Maintenance Fees
Another critical red flag when buying a condominium unit is when other owners are not paying their monthly fees in a timely fashion. When the board must pursue foreclosure on non-paying unit owners, it results in serious expenses to get non-paying owners out of the building.
The Residents’ Reluctance to Provide Information Can be a Red Flag when Buying a Condominium Unit
When a condo association or management company is reluctant to provide information, budgets, minutes, or other details to potential buyers, this lack of transparency should be a serious red flag.
Residents Who Are Not Happy
Speaking to other owners can give you further insight into the building you are looking at. If several owners are unhappy with the board and management of the building, you should consider this a warning.
How Can Unhappy Residents in a Condo Indicate Potential Problems?
Unhappy residents in a condo indicate potential problems through frequent complaints, high turnover rates, and disputes with management. Common signs include unresolved maintenance issues, poor communication, and dissatisfaction with amenities. These issues often reflect deeper problems in financial management, governance, or community relations.
If the Culture Is Not the Best Fit for You, It is a Red Flag
Condo living is in close proximity. Some condos have an overarching culture, and your level of comfort as a unit owner may depend on how well you fit into it. If you do not fit in, that building may not be your best choice.
| Red Flag | Details |
|---|---|
| Poorly maintained common areas | May indicate neglect, hidden issues, or upcoming costly repairs. |
| Building construction issues | Could lead to structural or safety problems due to shortcuts by developers. |
| Very high maintenance fees | May suggest poor budgeting, mismanagement, or inflated costs. |
| Very low maintenance fees | Could point to underfunding and potential special assessments during emergencies. |
| Non-paying residents | Creates financial strain on the condo association and impacts maintenance and reserves. |
| Reluctance to share documents | Lack of transparency may indicate mismanagement or hidden issues. |
| Unhappy residents | Signals dissatisfaction with management, unresolved issues, or poor community governance. |
| Culture mismatch | Can affect long-term comfort and quality of life in the condo community. |
Check for Legal Issues Before Buying a Condo Unit
When considering the purchase of a condo unit, it’s crucial to check for any legal issues that may affect the property. This includes looking into any ongoing litigation involving the condo association. Legal disputes within a condo community can significantly disrupt daily life and even result in financial burdens for residents.
As a potential buyer, you should ask about the condo association’s current legal status. Find out if there are any active lawsuits and understand the reasons behind these legal challenges. Whether the litigation involves disputes over property management, contractual disagreements with vendors, or conflicts among residents, each scenario can have a different impact on the association’s finances and the community’s overall stability.
It’s also important to assess how these legal matters could influence your future living situation and financial commitments. High legal expenses may lead to increased maintenance fees or special assessments charged to the condo owners. Additionally, ongoing disputes can affect the community’s atmosphere and even the resale value of the units.
Taking the time to investigate these legal aspects helps you make a well-rounded decision about purchasing a condo. It’s advisable to consult with an experienced Manhattan condo real estate attorney who can provide detailed insights and guidance on these matters before finalizing any purchase.
The Advantage of Buying a Condo
The biggest advantage condos have compared to co-ops is that condos are by far easier to buy. Unlike co-ops, which have a managing board that can subject tenants to restrictive rules on occupancy and subletting, you have the freedom to use a condo as your primary residence or have someone else live in it. All that matters when buying a condo is that you have enough funds to pay for your purchase. When you buy a co-op, you may be subjected to an interview with the Board of Directors where your application to purchase is still subject to approval. This is one of the main reasons why foreign investors have an easier time purchasing condos.
Condos may be the better choice for speculative investors. While prices understandably fluctuate as a response to the real estate market, condo buyers have the freedom to take on as much or as little risk as they like. Co-op purchases may require buyers to pay 20% of the down payment or a 25% debt-to-income ratio which can be a turn-off for speculative investors. For condos, you can purchase a property condo with as little as 10% of the down payment with any other debt-to-income ratio you desire as long as your lender agrees.
Getting the Legal Assistance of an Experienced Manhattan Condo Real Estate Attorney Before Buying a Condo
Choosing the right condo is essential from both a personal and financial standpoint. While you should have a real estate agent who is well-versed in condo sales, it is also crucial to know what to look for when doing your due diligence.
Natalia Sishodia and her team of skilled Manhattan condo real estate attorneys can help you understand whether a condo unit may or may not be right for you. Contact us today at (833) 616-4646 or schedule a consultation through our online contact form.
