I am live at a condo inspection today.  Buying a condo is different than purchasing a home. The main difference is the presence of a condo association. The association is in charge of the maintenance of the common elements – mainly the exterior items. Additionally, a property like this one is owned by Fannie Mae means it was a foreclosure. I am going to share the 5 different nuances that come along with purchasing a foreclosure and a condo.

1. When getting a condo inspection, the exterior items are not the responsibility of the seller.  The condo association is responsible for remedying the items. Items such as roofs, gutters, or shutters are managed by the condo association. You or the seller will need to contact the association to have the items addressed.
2. When buying a foreclosure, the contract will be written “as is”; repairs cannot be requested.  The seller is no longer present and the bank or Fannie Mae are not likely to do repairs.  The inspection is to help you decide if you wish to move forward on the purchase. You can back out of the contract or attempt to negotiate a new contract at a lower price, if surprises show up during the inspection.
3. Make sure to do research on the condo association before purchasing a condo.  Before going under contract (or during your inspection period), look at the financials, bylaws, and other governing documents for the condo association. These documents will help answer key questions such as how well the association maintains and cares for the property. You want to ensure your fees and payments will not be mismanaged. One key number to find is the condo association’s capital reserves.  Capital reserves are the funds the association uses to pay for improvements such as roofs for the common elements.  Reserves are a good indicator of the health of the association and its management.
4. Condos and foreclosures have additional closing costs.  For example, Solano Grove Condo Association requires two months of non-refundable association fees at closing.  For foreclosures, you often will pay in full or split fees with the seller that in a normal transaction the seller would pay in full. Talk to your agent or the title company to determine what additional fees will be collected at closing.
5. Estoppels are an additional step for a condo closing. Estoppel is when the title company or mortgage provider check that the seller is in good standing (no unpaid dues, violations, etc.) with the condo association.  There is a fee associated with an estoppel.  With a foreclosure, you will likely pay the fee.  In a normal transaction, that is an item your agent can negotiate with the seller. The seller may pay it according to the terms you decide and how your contract is written.