photo courtesy of Chicago Magazine
One of things that sets Chicago condominium living apart from other types of housing is that ownership of a condo necessitates membership in the building’s condo or homeowner association (often called an HOA.) A condo association is a collective group made up of all the owners of units within a building or complex; membership is mandatory. A condo association is a corporation with legal bylaws, and it is usually governed by a board of directors that is elected by the members. By collecting mandatory monthly assessment fees from members, the condo association pays for all shared amenities and services, such as garbage removal and recycling, grounds-keeping, exterior building maintenance and security. A condo association may also plan social events and mediate disputes between condo owners, among other things.
Before deciding whether or not to put in an offer on a specific condo, it is wise to do a little research into the condo association that governs that building. For example, here are some of the things we like to do when considering a potential purchase in building governed by a condo association:
• Read all of the rules and regulations (called Covenants, Conditions and Regulations, or C, C&Rs in this context) currently required by the condo association. Make sure you can live with conditions and restrictions imposed by these regulations.
• Find out how much the condo association currently charges in fees (or “assessments.”) Once you have purchased the condo, you cannot legally decline to pay these assessments, and they can range from very little per month to hundreds of dollars per month, depending on the property’s amenities and services.
• Consider possible future increases in these assessments. Find out how often the association has raised the mandatory assessment fees during its history, and take into account whether your finances will be able to withstand future increases.
• Ask whether the condo association has cash reserves for emergency maintenance needs. If they do not have cash reserves, this presents the possibility of extra fees in case of emergencies.
• Determine whether there are term limits for the Board, and if Board members have attended training sessions in efficient condominium management.
• Determine if there is litigation pending involving the condo association and the circumstances surrounding that litigation if so.
While there are similarities between condo associations, no two are alike, so we recommend that you do this research for every building you are considering before deciding to put in an offer, and we are happy to help with this process!