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Salt Lake City Homes & Condos: Buying Salt Lake City Condos

There are quite a few differences between Salt Lake City condos and single family homes in Salt Lake City.

The ownership of a condo is usually just the inside of the unit. Everything outside of the unit is owned equally or proportionately to the size of the unit, by all the owners in the condominium complex.

Condos in Salt Lake almost always have a Home Owners Association (HOA) which manages operations, maintenance of the common areas, the finances and the money collected from the HOA fees. They may also be involved with making critical decisions about when to make major improvements like roof replacements, elevator upgrades and road maintenance.

As the owner of a condo unit, you usually pay a monthly home owners association (HOA) fee which may pay for some utilities and on going maintenance and improvements of the exterior and common areas. The maintenance may include mowing the lawn, landscaping, snow removal and maintaining the common areas.

Some other items the monthly HOA fee may include are utilities like water, sewer, cable, and in some cases heating and cooling. All of this varies depending on how the specific condo project is run. It's very important to determine what's included in the HOA fee in advance of making an offer to purchase a condo.

So the HOA collects the funds, pays the monthly bills for utilities and maintenance and puts the rest in savings as a reserve for the big items like roof replacement and road maintenance. But what happens if they don't have enough money in reserve to do the big items when they need to be done? Or what if something unexpected happens?

This is when you run into special assessments. A special assessment is an additional expense beyond the monthly HOA fee that is assessed on each condo unit and owner. Most HOAs try to avoid these by occasionally increasing the monthly HOA fee to keep cash reserves high enough and by anticipating when the big items need to be done.

However, on occasion due to a surprise or poor management by the HOA and/or property manager, condo owners will get stuck with a special assessment. If the assessment is expensive and goes on for a couple years or more, it can make it the units in the condo project less appealing to buyers and can decrease the value of the units within that condo project.

If the condo owner doesn't pay the assessment, the HOA will usually put a lien on this unit so it can't be sold until the assessment is paid. The seller also has to disclose any special assessments to the buyer.

That said, when a buyer makes an offer on a Salt Lake City condo with his or her Realtor, there is a clause in the Real Estate Purchase Contract (REPC) which requires the Seller to give certain disclosures including, a copy of the CC&Rs (covenants, conditions and restrictions), and the most recent minutes, budget and financial statements for the HOA. There also questions about the HOA and assessments on the Seller's Property Condition Disclosure which the seller provides to the buyer. All of these items help the buyer evaluate the current situation, but it's not a guarantee that you won't run into a special assessment in the future.

The Home Owner's Association (HOA) of some Salt Lake City condos are managed better than others. Check on how much money the HOA has in reserves and if that's an adequate amount considering what needs to be done. Look around at the grounds, the roads and the exterior of the buildings. Is everything well kept and in good shape?

What About Pets in Salt Lake City Condos?

Condos in Salt Lake sometimes don't allow pets or limit them by size or type of pet. For example, some condos only allow dogs below 20 lbs, or only allow cats, fish or birds, or might not allow any pets at all. They may also limit the number of pets. Check with your Realtor and confirm with the Condos CC&Rs or House Rules for that condo project. Just because you see a cat in a unit, doesn't mean it's allowed, confirm!

Is their Laundry in the Unit?

Some Salt Lake City condos have laundry in the unit, some have a shared laundry room and on occasion no laundry is available. If having laundry inside your condo is important, make sure you tell your Salt Lake City Realtor this.
Salt Lake City Condos as Rental units:

Most condo complexes have a limit on the percentage of units or which units can be rented out. The reason for this is that Freddie Mac and Fannie Mae, which are the big underwriters for residential mortgages in the U.S., will not loan on a condo unit if it is in a complex that has too many rentals. If the condo complex has too many units rented out, then the only type of financing available is non-conforming financing at a higher interest rate and this can push values down. If you plan on renting the unit out, you better ask if it's allowed before you buy it.

When buying Salt Lake City condos always:

Check the finances (budget and savings) of the condo project.
Determine if there are any one time assessments (past, present or future).
Read over the CC& R's, bylaws, amendments, and house rules.
Ask about the HOA fee, has it been stable, are there any future increases planned?
Review the minutes of the recent HOA meetings.
Ask if their is any pending litigation against the condos HOA.
You may also want to talk to the people involved in the HOA.
Always have a Home Inspection done.
Look over the exterior and common areas.

10 Questions to Ask the Condo Board

Before you buy, contact the condo board with the following questions. In the process, youll learn how responsive and organized its members are. You'll also be alerted to potential problems with the property.

What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can't rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.
How much does the association keep in reserve? Plus, find out how that money is being invested.
Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.
What does and doesn't the assessment cover? Does the assessment include common-area maintenance, recreational facilities, trash collection, and snow removal?
What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board's fiscal policy.
How much turnover occurs in the building? This will tell you if residents are generally happy with the building. According to research by the NATIONAL ASSOCIATION OF REALTORS'®, owners of condos in two-to-four unit buildings stay for a median of five years, and owners of condos in a building with five or more units stay for a median of four years.
Is the condo building in litigation? This is never a good sign. If the builders or home owners are involved in a lawsuit, reserves can be depleted quickly.
Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer's report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren't in good repair, they become your problem once you buy.
Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which youre buying, may require separate assessments.

Condos in Salt Lake are a great way to go! There are usually many low cost options for first time buyers that cost less than an entry level home. They may also have amenities you could not afford if you purchased a house, like a pool, hot tub, tennis courts, club house, fitness center, lawn care and snow removal. And downtown Salt Lake City condos allow you to live in the center of the city if you choose.

If your plan is to move from one home to another, just putting your home on the market isn’t enough. Your home will need to be ready to show and you’ll need a strategy to accomplish the sale and purchase of another home in a reasonable time frame.

With 10 years selling homes in metro Salt Lake and 20 years in the real estate business, I have many strategies and an in depth understanding of what it takes to help you sell and buy another home. Call or email me if you’d like to take advantage of this opportunity!

Contact SLCHomeBuyer and Kevin Coyle