When you think of buying a home, what comes to mind? A single-family house with a yard and a garage probably come first. However, an increasing number of buyers are considering condominiums as an alternative to renting or buying an apartment. You may also consider a condotel if you want worry-free maintenance or decide to rent it out.
condo vs condotel, what’s the difference? Condotel units are hotels that are sold to individuals but continue to operate as a hotel. These units offer conveniences like a hotel, such as front desk check-in, on-site restaurants and lounges, gift shops, and are often sold furnished.
Your unit can be used whenever you like, but you can also rent it out to others for times when you’re not. When deciding whether to buy a condotel or a traditional condominium you need to think about your lifestyle and needs.
Are you looking for a primary residence or do you prefer to keep your vacation home as a rental property? A traditional condominium might be better suited to your needs. Do you want a second home that you can use whenever you wish, but which also allows for easy maintenance and generates rental income more quickly? Perhaps a condotel is more suitable for your needs.
Condo ownership has many benefits: It’s easy to maintain, provides a sense of community, and can be less expensive than renting. Depending on the condo association, there may be restrictions on pets or other activities that require board approval.
There are some important legal considerations if you’re considering purchasing a condo as your primary residence. This article covers everything you need to know before signing on the dotted line.
Condo Limitations
Just because you own a condo, doesn’t mean you own the land beneath it. In most cases, the condo development company owns the land, and you’d simply pay them a fee to use it. In other words, you can’t build on the land and you can’t sell the land to anyone else.
If you were to sell your condo, however, you could negotiate with the buyer to sell their share of the land. If you want to build on the land beneath your condo, however, you’d need to get approval from the condo board and the condo association. If you have a bigger project in mind, like building an addition, you’d likely need to get approval from the city as well.
Condo Board Member Responsibilities
As a condo board member, you’d be responsible for attending monthly condo meetings to discuss the maintenance of the building and address noise complaints. You’d also be responsible for approving or denying repairs to the building, as well as approving or denying new condo purchases.
In some cases, you may even have to help collect late fees from owners who don’t pay their dues on time.
Financing a Condo
If you’re financing your condo purchase, you’ll want to make sure you understand the difference between an FHA loan and a conventional loan. With an FHA loan, you’ll need a 3.5% down payment on a condo.
A conventional loan, on the other hand, requires a 20% down payment on condos. When it comes to financing a condo, you’ll want to make sure you’re familiar with the condo’s HOA and condo association fees. The fees, which cover all the things that make your building a livable space, are typically rolled into your mortgage payment.
So, you’ll want to make sure that you have enough wiggle room in your budget to account for these fees over the long haul.
Title and Escrow
When you buy a condo, you don’t actually own the unit yet. Rather, you have what’s called an “escrow,” which is a legal mechanism that protects the buyer while the seller completes the transaction.
Once your title company has reviewed and approved the condo’s title, they’ll release the escrow, and you’ll be able to sign the sales contract and close on your condo.
You might consider hiring a real estate agent and real estate attorney who are experienced in the buying and selling of condos. To help you uncover potential problems that could negatively affect your lifestyle, they can assist with the documentation of the condo association, including recent regulations and budget.
Insurance Implications
If you’re a condo owner, you’ll need to make sure that your condo is insured. This is especially important if you’re renting out your unit because you’ll need to protect your investment in the event of an accident. If you’re owning a condo, you’ll need to make sure that your condo building is insured as well.
This coverage usually comes from a condo association insurance policy, which is meant to cover the building and its common areas (not the individual units). Keep in mind that if you’re a condo association board member, you’ll be responsible for making sure that the condo building is adequately insured. Don’t assume that the condo association board members are on top of it.
Conclusion
When it comes to condo ownership, there are a few things to keep in mind. First off, you’ll need to make sure that you’re buying into a condo building that has a proven track record and is financially sound. As with any real estate purchase, you’ll also want to make sure that you’re buying a condo in a convenient location and that it has solid resale value.
It’s important, though, to keep in mind that buying a condo doesn’t come without its fair share of responsibilities. You’ll need to keep up with monthly condo dues, as well as make sure that your unit is properly insured. Be sure to consult with an attorney before you make the purchase, so you’re fully prepared for all the legal implications of condo ownership.