Kathleen Garcia says the binder full of condo documents she received was a bit overwhelming when she bought her first property. Photo by Wil Andruschak / For CREB®Now

Getting professional advice can help first time buyers understand condo documents and avoid potential disasters when purchasing a condo

Kathleen Garcia was lucky.

When the 27-year-old bought her first home, a resale condo in the southwest neighbourhood of Kingsland, she had the advice and financial support of her parents, and a REALTOR® knowledgeable about the condo market.

“I don’t know what I would have done without (my parents),” said Garcia, who purchased her one-bedroom unit three years ago.

They handled most of the process and also found her a lawyer. What was initially intended as a rental investment for the financial sector employee quickly turned into her new home.

The location, near Chinook Mall, was much closer to downtown and had better transportation options than the New Brighton home Garcia was sharing with her parents.

After the purchase, Garcia got a binder full of documents relating to her condo, but found the size of it overwhelming. Although she did have an accountant colleague study the documents, she would have loved a mulligan on one part of the process.

“I would have gotten homeowners’ insurance. My pipes burst this past winter. I thought the condo corporation insurance would cover it, but it didn’t,” lamented Garcia.

Bernie Winter, founder of Condo Check – a document review company that analyzes the stability of condo corporations for buyers, Realtors and condo management – says there is critical research buyers must do to prevent purchasing a whole bunch of potential problems.

Falling in love with a condominium is only the first step towards that first-home purchase, he says.

I would have gotten homeowners’ insurance. My pipes burst this past winter. I thought the condo corporation insurance would cover it, but it didn’t.

The process for buying a new build or converted condo is different than a resale. With tougher legislation, such as mandatory warranties for new projects, due diligence is important in all cases.

“A great view and layout are not enough. You don’t want to fall in love with something that turns into a nightmare,” said Winter, who has been in the industry for 40 years.

Canada Mortgage and Housing Corporation’s (CMHC) Condominium Buyers’ Guide recommends buyers find out what the maintenance obligations will be, the condo management style and the home buyers’ comfort with that style.

Home buyers should also be educated about current rules regarding number of occupants, noise, pets, amenities, parking, altering the unit’s appearance, and how those rules are upheld.

CMHC recommends investigating whether the condo corporation has the minimum insurance required by the province and your own insurance obligations.

Buyers should also prepare a budget including: monthly condominium fees or common expenses; property taxes; unit and contents insurance; mortgage payments; and amenity fees, such as storage, pool, extra parking, etc. On top of that, common expenses includes: utilities, telephone, cable and Internet access, plus a contingency for emergency repairs; and maintenance costs associated for unit upkeep.

Bernie Winter, founder of condo Check, has these recommendations when buying a condo:

1. Be willing to pay for all the documents you need. Alberta’s Condominium Property Act (section 44) lists what you are entitled to. This includes the condo reserve study and plan, financial statements, and minutes from condo board meetings and the Annual General Meeting. Many condo projects and condo management companies post the documents on their websites. Winter recommends reviewing the past 12 condo board meeting minutes.

2. Have the documents properly reviewed and use a lawyer experienced in condominium work. Additionally, a professionally accredited document review company will go through hundreds of pages and then red-flag concerns.

“When you are spending $300,000, $400,000 or $500,000 on a condo, finding out there is an $187,000 assessment on the unit you are thinking of buying is important — that is something that could bankrupt you,” said Winter.

3. Treat your condo as a real estate purchase and an investment you turn over to a condo corporation and a board to manage. Don’t be afraid to ask questions and scrutinize decisions. The homeowner is also buying into a condo corporation responsible for communal areas like hallways, elevators, and structural elements, with specific rules and regulations.