Condo Purchases: What Buyers Need to Know Before Making an Offer

Condominiums can be an excellent entry point into homeownership, offering affordability, convenience, and lower maintenance compared to detached homes. However, buying a condo is very different from purchasing a single-family home.

Buyers aren't just purchasing a unit—they're also buying into a corporation, its finances, and its management.

As mortgage professionals, realtors, and buyers know, a condo that appears affordable on the surface can quickly become expensive if the corporation is poorly managed.

Here's what every condo buyer should know before purchasing.

1. Understand What Condo Fees Actually Cover

One of the biggest misconceptions among buyers is that condo fees are "money thrown away."

In reality, condo fees contribute toward:

• Building insurance

• Reserve fund contributions

• Exterior maintenance

• Snow removal and landscaping

• Common area maintenance

• Professional management

• Utilities (in some complexes)

The key isn't finding the lowest condo fees—it's finding fees that are appropriate for the age, size, and condition of the property.

Example

Good Sign:

• Condo fees are $450/month

• Reserve fund is healthy

• Building has completed major repairs

• No special assessments anticipated

Potential Red Flag:

• Condo fees are only $250/month

• Reserve fund is underfunded

• Major repairs are upcoming

• Owners may face special assessments later

Low fees can sometimes indicate deferred maintenance rather than good management.

2. Review the Reserve Fund Study

A reserve fund study is one of the most important documents in a condo purchase.

It evaluates future repair and replacement costs for major components such as:

• Roofs

• Windows

• Elevators

• Boilers

• Parking lots

• Building envelope

The study outlines expected costs and whether the condo corporation is adequately saving for future repairs.

Good Example

A reserve fund study shows:

• Reserve fund balance: $1.2 million

• Roof replacement planned in 8 years

• Window replacement planned in 12 years

• Current funding meets projected expenses

This indicates proactive planning.

Bad Example

A reserve fund study shows:

• Reserve fund balance: $150,000

• Roof replacement required within 2 years

• Expected cost: $800,000

• No plan to raise funds

This often leads to special assessments for owners.

3. Watch for Special Assessments

A special assessment occurs when the condo corporation needs money beyond what is available in the reserve fund.

Owners may receive unexpected bills ranging from a few thousand dollars to tens of thousands.

Questions Buyers Should Ask

• Have there been special assessments in the past five years?

• Are any special assessments currently planned?

• Are major repairs pending?

• Has the reserve fund study identified funding deficiencies?

A history of repeated special assessments may indicate chronic underfunding or poor management.

4. Read the Board Meeting Minutes

Many buyers overlook meeting minutes, but they often reveal issues before they become public knowledge.

Look for recurring discussions regarding:

• Water leaks

• Building envelope issues

• Elevator problems

• Insurance claims

• Litigation

• Resident complaints

• Upcoming major projects

Good Minutes

• Routine maintenance discussions

• Budget reviews

• Preventative maintenance planning

• Few owner complaints

Bad Minutes

• Frequent leak complaints

• Discussions about legal action

• Insurance concerns

• Reserve fund shortfalls

• Ongoing construction deficiencies

Meeting minutes often tell the real story behind a building.

5. Investigate Insurance Claims

Insurance challenges have become increasingly important for condo buyers.

Frequent claims can result in:

• Higher condo fees

• Increased deductibles

• Difficulty obtaining unit insurance

• Greater owner liability

Ask:

• How many claims has the corporation had recently?

• Have deductibles increased significantly?

• Is the corporation having difficulty obtaining insurance coverage?

6. Understand Rental Restrictions

Many buyers purchase condos intending to rent them out in the future.

Before buying, review bylaws regarding:

• Rental restrictions

• Short-term rentals

• Airbnb policies

• Tenant approval requirements

A condo that allows rentals today may become more restrictive if bylaws change later.

7. Pay Attention to Building Age

Age alone isn't a problem. What matters is whether major components have been maintained and replaced.

Newer Buildings (0–10 years)

Pros:

• Lower maintenance requirements

• Modern amenities

• Newer construction

Cons:

• Construction deficiencies may emerge

• Condo fees can increase rapidly after turnover

Older Buildings (20+ years)

Pros:

• Larger units

• Established reserve funds

• More predictable expenses

Cons:

• Major capital projects may be approaching

8. Consider Future Financing Implications

Lenders review condo projects carefully.

Financing can become more difficult if:

• The corporation has significant litigation

• There are large pending special assessments

• The reserve fund is severely underfunded

• The building has significant structural concerns

A well-managed condo generally attracts more lenders and can be easier to sell in the future.

Condo Document Review Checklist

Before removing conditions, buyers should review:

✓ Reserve Fund Study

✓ Reserve Fund Plan

✓ Current Budget

✓ Financial Statements

✓ Board Meeting Minutes (12 months minimum)

✓ Insurance Certificate

✓ Bylaws and Rules

✓ Special Assessment History

✓ Pending Litigation Information

✓ Management Company Information

Final Thoughts

A condo purchase isn't just about liking the unit. It's about evaluating the health of the entire corporation behind it.

For buyers, spending a few hundred dollars on a professional condo document review can potentially save thousands of dollars in unexpected costs down the road.

If this feels overwhelming, don't sweat, your lawyer will be mainly responsible for reviewing all of this information for you once you've made an offer so be sure to engage with your lawyer early and prepare them for the full condo doc review.

Mortgage Broker Tip: A condo with strong financials and a healthy reserve fund is not only less risky for buyers—it is often easier to finance, refinance, and sell in the future. Buyers should view condo documents with the same level of scrutiny as they would a home inspection.