Buying a Condominium vs. Buying a House

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 What are the Differences Between Buying a House and Buying a Condominium?

Although most people are unaware of it, there are fundamental differences between buying and owning a house and a condominium. These differences will undoubtedly factor into an individual’s decision about which type of residence to purchase.

The differences between purchasing a condominium (condo) and purchasing a house fall into three main categories:

  • Ownership: When an individual owns a house, they have the right to exclusive ownership of all the property they have purchased. This includes areas inside and outside the home. Anyone who enters their property without permission is considered a trespasser.
    • On the other hand, when an individual owns a condominium, they only have exclusive rights to the property within the walls of the condo unit. The condo owner only has a shared ownership interest in the common areas outside their unit – areas such as a hall or a courtyard. The condo owner must share this space with every other condo owner in the complex.
  • Defects and repairs: The owner of a house is solely responsible for all maintenance and repairs of their home and property. A homeowner is also responsible for their own homeowner’s insurance, known as property insurance. In some cases, if an individual buys a house in a planned, developed neighborhood, they will also be required to join a homeowner’s association (HOA) and pay dues. There may be rules regarding the upkeep of yards and the appearance of homes.
    • The condo owner is generally not solely responsible for repairs or upkeep of the property. Typically, a condo owner pays dues to an HOA (most condominiums require that all owners be members of the HOA). This association is responsible for the maintenance of common areas as well as maintaining property hazard insurance for the complex.
  • Modification of the property: In general, the owner of a house is free to modify or repair their home as they please. Be aware, however, that there may be local zoning ordinances that apply in cases where an individual wants to add a garage, deck, or room onto the existing structure. It is important to check on those before modifying.
    • Usually, a condo owner is restricted in the types of modifications they can make to the exterior of their unit. In some cases, there are also restrictions on interior modifications.
    • The appearance of the condo is usually governed by covenants, conditions, and restrictions (CC&Rs) outlined in the homeowners’ association documents they receive when purchasing the condo. It is important to request a copy of these regulations before purchasing a condo so that the individual can be sure they can follow the rules. This is especially important for individuals who may have to park large vehicles, boats, or RVs at their residences. Some HOAs restrict the owner’s ability to park large vehicles in driveways or on the road.

It is important to note that houses purchased in neighborhoods with HOAs must follow the rules, just like condo owners. Some HOAs include rules prohibiting working on vehicles in the driveway and parking marked work trucks in a driveway, and some prohibit using garages as storage units. Some HOAs must approve additions such as fencing, decking, or storage sheds.

Before any purchase that includes an HOA, a potential buyer should obtain a copy of the budget and notice of current dues assessment from the HOA. Be aware that an HOA can charge all residents an assessment when maintenance or repairs are needed for the complex.

It is essential to examine and understand the rules and requirements of the HOA before purchasing a house or a condo to ensure there will be no surprises. It may also be helpful to hire an attorney to review the documents before purchase. HOA documents are often written in legalese and can be hard for a non-lawyer to understand. An attorney may be aware of issues a non-lawyer would not recognize.

What Should I Know About a Property Before Agreeing to Purchase It?

There are several things you should know about a property before agreeing to purchase it.

Although the requirements vary by state, sellers must reveal disclosures about the property to a potential buyer. Usually, a seller completes a checklist of major or common disclosures. It is illegal to actively and intentionally conceal or fail to disclose a known defect.

Common disclosures include:

  • Flood damage
  • Cracks in the foundation
  • Termite infestations
  • The existence of property line disputes
  • Any other major issues

In addition to the seller’s required disclosures, you would be prudent to hire an independent home inspector to survey the property for defects. An inspector may discover issues the seller was unaware of or did not disclose. You may include a clause in the purchase contract that states the purchase of the property is contingent upon the completion of the inspection.

Another step you should take is to verify that there are no encumbrances on the property. An encumbrance may prevent you from obtaining legal title to the property or possession of the property. Most encumbrances are recorded and located at the county recorder’s office. Encumbrances may include:

A property may be sold subject to a mortgage or some other type of financial lien. You should check whether the property has a lien or mortgage. This can be found by doing a title search through the county recorder’s office. In most real estate transactions, this step is taken by a title insurance company before closing.

Why Should I Hire My Own Lawyer for a Real Estate Purchase?

While it may seem to be cheaper to use the seller’s attorney, that can wind up being quite expensive if problems arise. For example, if a lawyer is (practically speaking) representing both sides of the deal, there can be a conflict of interest if there is some problem with the property or the sale. The seller’s lawyer will not be looking out for your best interests but rather those of the seller. In the long run, that can be much more expensive than hiring your own lawyer would be.

If you have your own lawyer, that will ensure that your best interests are protected. In addition, an experienced local real estate attorney may be aware of alternative properties or real estate agents that may better suit your needs.

What are the Advantages of Using a Lawyer over a Real Estate Agent?

There are some advantages of using a lawyer instead of a real estate agent during a residential purchase process. One key point is that an attorney will have better law knowledge than a real estate agent.

In addition, a real estate lawyer’s fee may be cheaper. A real estate agent will charge a percentage of the purchase price, which may be thousands of dollars. You can speak with a qualified lawyer and get an estimate of what they would charge, and then compare the two figures.

Another benefit is that a real estate lawyer can draft a personalized real estate contract, unlike the boilerplate contract used by real estate agents. A personalized contract will be better suited to meet your needs. If the real estate lawyer does not draft the purchase contract, they must review the contract to ensure your rights are protected.

Should I Contact an Attorney to Purchase a Condominium or a Home?

Yes, it is essential to have the assistance of an experienced real estate attorney when purchasing a condominium or a house. There is often a lot of information to absorb, especially when a homeowner’s association is involved. A lawyer can review the documents and any contracts and ensure your rights are protected.

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