Florida's Emerald Coast has a variety of condominium buildings that allow buyers of all income levels to get a piece of paradise. Whether you are purchasing a beach front pent house in a new building on 30A or a small studio on Okaloosa Island, there are 5 key items you should review prior to placing an offer. While the unit itself is what you will be most concerned about, it is important to remember that you are buying a share in the financial responsibility of the entire building and property as well.
Every condominium association should have Reserve Accounts for large repair/replacement items on the building. These items can include but are not limited to elevators, roof replacement, painting & waterproofing, pool(s), fire suppression systems, and others. To understand if these accounts have the appropriate amount of funding, a well managed condo association will have a reserve schedule where a professional firm has created a reserve schedule that allocates a portion of the condo association's assessment income to the reserve accounts. Both the reserve accounts and the reserve schedule are something that can be requested from the seller.
Every condominium association should have a few different forms of insurance on the building. Flood Insurance is something that is imperative especially if you are looking at a ground floor unit or there is common property such as gyms and club houses on the ground floor. Common Property, Liability, Wind, and Named Storm coverage are other items to look for. The building should have an insurance appraisal updated every two years to ensure the appropriate coverage amounts. Another item to request is how the association intends to pay the insurance deductible incase of a hurricane or other event. Sometimes these deductibles are in the hundreds of thousands so it is important the condominium association has a plan or reserve account to cover this. While each association may be different depending on the Governing Documents of the Association, these are the typical items each association should carry.
3. Renovations - Special Assessments
All condominium buildings require constant up-keep. Gathering information on expected construction or renovations is important. These items are required from time to time and could impact your rental income or potential resale. Items such as roof replacement, painting & waterproofing, stairwell renovations, are all items that could potentially have a building shut down for a period of time depending on safety regulations. Also inquire how these renovations are to be funded. If the reserve are accounts are fully funded, then there is less to worry about. However, if the reserve accounts are not fully funded, you may be looking at a special assessment in the near future. There are specific disclosure laws with regards to upcoming special assessments and the seller may or may not have to disclose a possible special assessment.
It is required for the seller to disclose if the condominium association is involved in any litigation with contractors, developer, or owners in the building. Always ask for this information and have your attorney review the documents. Litigation could cause the condominium association to be responsible for the other party's attorney's fees or other expenses. If the developer is involved in litigation with the condominium association and construction is not complete, it may cause a delay in completion of the property. Again, make sure you have an attorney review the items if you are considering purchasing a unit in a building involved in litigation.
In today's world everyone has a smartphone and computer, multiple gaming devices, and other streaming services. Internet and cable services are typically negotiated but the condo association for the unit owners. Make sure the service is up to your standards especially if you utilize the internet for work or your kids have zoom calls for classes. Many of these contracts are long term, expensive, and sometimes tough for the association to get out of. You could purchase a unit that in a building where you struggle to connect to the internet for work or when relaxing fail to stream your favorite Netflix show. Another contract to be aware of is the elevator maintenance and repair contract. Elevators are a major expense for condominium buildings and the contracts for services outline these expenses. Make sure the elevators are well maintained and that the owners who are currently there are happy with the maintenance work on the systems.