mortgage

Get condo inspection before closing

Steve McLindenq_v2.gifDear Steve,
You recently mentioned that when buying a new single-family home, you should get a builder-warranty inspection before the warranty expires. Does this apply to a new condominium? I ask because I am looking to buy one of the new units that have recently been added to an existing complex. How would inspections of these two types of properties differ?
-- Danielle

a_v2.gifDear Danielle,
A warranty inspection of a condo is far less comprehensive by nature and slightly less expensive than the warranty inspection of a conventional new-construction home. For a conventional home, these inspections evaluate a structure's components and system, inside and out, comparing them to industry standards and code requirements. It's performed before the builder warranty expires to determine if the home measures up to the owner's quality expectations and to call the builder's attention to any deficiencies that could lead to future problems.

But in the case of a condo, such an inspection would cover only the visible structural, mechanical, electrical and plumbing, and systems inside the particular unit. Even though the overall physical condition of a condo development can be significant in determining how challenging it will be to resell your individual condo unit someday, there are many common elements such as hallways, façades and common mechanical systems that typically aren't examined by the inspector because they aren't part of the specific unit you're buying.

Repairs and maintenance of these elements are the responsibility of the condo association and are financed through association dues. Condo warranty inspectors can, however, note obvious problems in association-controlled common features and do a little more in-depth inspection of the premises for an additional fee, provided they are allowed easy access to all these areas.

Your condo association should maintain something called a reserve study, which you will want to review. Such studies, which are typically performed by engineers and architects, take into account the viability of the property's key structural and mechanical elements, including their condition and age and the anticipated maintenance, replacement or repair work they'll need over the next five years. (These studies should be updated every five years, by the way.) Compare the latest reserve study with the latest condo association budget, which should list funds in reserve for future projects and repairs. If these projects aren't covered in the budget, you may be required to pony up for a "special assessment" at some point to fund them. Ask plenty of questions about this before you sign the final papers.

Other tips: Although the condo warranty inspector will probably switch on your appliances to see if they're working, give them a good test run yourself to be sure they are operating properly. Also, be sure to schedule your warranty inspection at least one month before the warranty expires.

Good luck!

To ask a question of the Real Estate Adviser, go to the "Ask the Experts" page, and select "buying, selling a home" as the topic.

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