(Condo Contact Article – Fall 2012)
CONDOMINIUMS – WHAT’S THE DIFFERENCE?
When people are Buying and Selling Condominiums, the realization of what exactly they are purchasing and buying into becomes secondary at times as they get caught up in the frenzy of the search for the perfect view, or the one that has amenities that they want or have seen in an Ad.
We often run into Buyers/Sellers, and other parties involved in the Real Estate transaction who aren’t completely versed in what exactly happens during the purchase of a Condominium or even after the purchase they aren’t aware that they have responsibilities that they have agreed to.
The continual learning process for Real Estate Agents is one that focuses a great portion on Residential and Commercial Transactions. But often, the process of Buying and Selling Condominiums is grouped within the Residential training and most of it is learned by trial and error. The courses provided are worthwhile and valuable, but they only scratch the surface of what can happen during the Sale and what Property Managers, Lawyers, and Condominium Boards deal with on a daily basis.
The process of requesting the Status Certificate during the Conditional Period of the Sale should provide for a 2 week window on the majority of Real Estate Offers in Ontario (some exceptions may apply, depending on the market) to allow the Property Management and the Attorney ample time within the 10 Day Standard to process, review and address any concerns. (This alone can cause some stressful moments for Property Managers and Attorney’s as the Agent may have neglected to provide adequate time frame to complete the request) It is my belief that there is a great opportunity for the Agent to engage and support the Managers and the Attorneys during the process. It provides their Client with further due diligence and increases the professional relationship between the 3 parties involved in the Status Certificate Request. The agent should also offer to act as the liaison for general inquiries to the property manager that the Listing Agent may not be aware of.
Part of the Agent’s responsibility also lies in advising their client’s exactly what is included in the Condominium Fees, and compare against other Condominium Corporations in regards to common element use, and overall experience. They should also be able to assist with reviewing:
1. Fees vs. Fees: are you comparing like properties? Is one a newer condo? (ie. Less than 3 years) and if the condo is older (ie. 15-20 years) how healthy is the Reserve Fund?
2. Reserve Fund: When the Attorney reviews the documents, and needs some clarity or details the agent should offer to inquire on their behalf. (This also provides the Agent with the tools to be better advised for their Client’s needs).
3. When searching for an Attorney, like searching for a Real Estate Agent, the Client should enquire if they have experience with Condominium Purchases and how comfortable are they reviewing the Reserve Fund along with the By-Laws?
The more the Real Estate Agent can support the process, the less surprises and last minute stresses will occur. In today’s age of access to quick information on the internet it is critical that Buyers/Vendors verify and confirmthe information they are provided and ensure that it is vetted by either their Real Estate Agent (via the Listing Agent or through the Condominium Management Company) or through their Lawyer. As with any Residential Real Estate transaction, due diligence is critical but is definitely key in ensuring that one’s client (or yourself!) is fully aware of what is entailed when you purchase into a Condominium Corporation.
There are some Key Differences that should be considered when looking between Residential Homes and Condominiums:
1. Real Estate Agents: Does your agent know what is involved in a Condominium Purchase? Ask them how much experience and/or education they have invested in related to Condominiums and related topics.
2. Searches: Residential Searches can also include Housing Associations which are similar to Freehold Condominium, but have different rules and By-Laws as opposed to Regular Condominiums. *the Key is ensuring your Realtor knows the difference.
3. Attorney: when researching to hire an attorney, your Real Estate Agent can provide you a list that they or their office have worked with. It’s a good practice to inquire which ones have had experience in reviewing Status Certificates and understanding Reserve Funds.
4. Comparing Condominiums should include what the fee is in comparison to the features/benefits of the items covered by it. (ie. Water/Gym/Pool/Common Grounds)
5. How old the Condominium building is. This can weigh into the review of the Reserve Fund, and how recently the Reserve Fund Study was completed. *note: Using a Home Inspector is always recommended, but Agents should ensure their clients are aware that reviewing common property that is enclosed/locked up is not a requirement. The Inspection should cover the interior of the Unit being purchased and a cursory review of the building exterior for information purposes only.
Overall, the role of the Real Estate Agent shouldn’t be simply to process the sale of the unit, but also to support all the parties as they are the one common factor during the entire transaction. The ability of the Agent to provide assistance and valuable resources and information creates an environment of consistency and professionalism.
With the ever changing real estate market continually moving towards a great amount of Condominium projects and Re-Sales, the Real Estate Community along with those that participate in the business is quickly becoming a core group that needs to be able to rely on each other for qualified assistance and accurate and timely business practices.
Mike Lewicki is a Sales Representative at Keller Williams VIP Realty (Independently owned and operated brokerage) where along with his Team Partner, Adam Bowman they focus on Residential and Condominium Real Estate for their client’s in Ottawa and Surrounding Area. They have a blog about residential and condominium real estate that can be found at www.bowmanlewicki.com