Purchase of Florida Condo
Apr 3rd, 2015, 06:08 PM
#1
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Purchase of Florida Condo
My daughter and SIL are looking to purchase a condo Alabama/Florida panhandle. What specific questions should she ask regarding HOA, assessments, insurance, age of building, neighborhood, ect. All your suggestions are appreciated and valued as we are not Florida residents and are not familiar with Florida law. Thank you.
Apr 3rd, 2015, 06:21 PM
#2
You could easily ask to see the condo financial statements as well as six-months' worth of meetings. Be aware, however that those meeting minutes do not necessarily contain various resident complaints and issues because some condos actually air those in post-meeting sessions which are not recorded.
The financials should clearly indicate the amount of reserves, the costs of insurance for the structure, etc.
The age of the building should be easy to determine. They might also ask what, if any, storm protection(s) are in place such as high impact windows (including both large and small missile), shutters, etc., and whether or not the building is situated in a flood zone.
Another thing to be aware of is the very general rule regarding property taxes. As you probably know, Florida has neither state income nor inheritance taxes; sales tax rates vary by county. This means that a large majority of the county and state incomes comes from property taxes. As to that "rule" you can more or less figure the property taxes will be approximately 2% of the sales price. Unlike in some states, when a property goes through a sale here in Florida it is reassessed so the new owner's taxes may very well be significantly different than what the seller has paid.
The financials should clearly indicate the amount of reserves, the costs of insurance for the structure, etc.
The age of the building should be easy to determine. They might also ask what, if any, storm protection(s) are in place such as high impact windows (including both large and small missile), shutters, etc., and whether or not the building is situated in a flood zone.
Another thing to be aware of is the very general rule regarding property taxes. As you probably know, Florida has neither state income nor inheritance taxes; sales tax rates vary by county. This means that a large majority of the county and state incomes comes from property taxes. As to that "rule" you can more or less figure the property taxes will be approximately 2% of the sales price. Unlike in some states, when a property goes through a sale here in Florida it is reassessed so the new owner's taxes may very well be significantly different than what the seller has paid.
Apr 4th, 2015, 12:48 AM
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Excellent post by Dukey.
They need to read all the incredibly boring condo documents ("the docs") on any property where they might get serious. The docs will cover subjects like:
1. Quiet hours
2. Whether they can rent, how long they can rent, to whom they can rent, who has to approve a rental, and what are the rental fees to the condo association.
3. How many visitors can they have? For how long? How old? Is it a 55+ community?
4. What can they do to the outside of their unit? Condos may prohibit changing door colors, seasonal decorations, outside lights, storing bicycles or lawn furniture where it is visible, and, yes, rarely, even American flags, though almost certainly things like college flags, Easter banners, etc. will be banned.
5. Who has to give permission before they can do work inside and when it can be done?
6. What percent is owner occupied and what percent is rented out? This can make a difference in their ability to get a mortgage.
7. Are pets allowed? What size? How many?
8. Can you park a truck at your unit? Boat? Trailer?
9. Who owns the condo development? In new developments, the developer makes all the decisions until a certain number of units has been sold and can unilaterally make changes in rules, regulations and even promised amenities.
Condo/homeowner association documents are legally enforceable documents, and sometimes you sign away your constitutional rights in order to preserve harmony and property values in a dense place.
This may be fine. It may not be. The only way you know is to read and digest the documents. If you have a short attention span, pay a lawyer or paralegal to read through and make a list of what you can and can't do and what your responsibilities are financially and otherwise if something goes blooey.
We had a good experience -- mostly -- owning a condo in Florida. A relative owned a townhouse in an HOA on the beach that lost its roof and was flooded twice by hurricanes.
They need to read all the incredibly boring condo documents ("the docs") on any property where they might get serious. The docs will cover subjects like:
1. Quiet hours
2. Whether they can rent, how long they can rent, to whom they can rent, who has to approve a rental, and what are the rental fees to the condo association.
3. How many visitors can they have? For how long? How old? Is it a 55+ community?
4. What can they do to the outside of their unit? Condos may prohibit changing door colors, seasonal decorations, outside lights, storing bicycles or lawn furniture where it is visible, and, yes, rarely, even American flags, though almost certainly things like college flags, Easter banners, etc. will be banned.
5. Who has to give permission before they can do work inside and when it can be done?
6. What percent is owner occupied and what percent is rented out? This can make a difference in their ability to get a mortgage.
7. Are pets allowed? What size? How many?
8. Can you park a truck at your unit? Boat? Trailer?
9. Who owns the condo development? In new developments, the developer makes all the decisions until a certain number of units has been sold and can unilaterally make changes in rules, regulations and even promised amenities.
Condo/homeowner association documents are legally enforceable documents, and sometimes you sign away your constitutional rights in order to preserve harmony and property values in a dense place.
This may be fine. It may not be. The only way you know is to read and digest the documents. If you have a short attention span, pay a lawyer or paralegal to read through and make a list of what you can and can't do and what your responsibilities are financially and otherwise if something goes blooey.
We had a good experience -- mostly -- owning a condo in Florida. A relative owned a townhouse in an HOA on the beach that lost its roof and was flooded twice by hurricanes.
Apr 4th, 2015, 05:43 AM
#4
Ackislander, YOUR post is much more comprehensive than mine and I agree with everything you have said. The balcony (assuming there is one) restrictions are in effect to various degrees in a lot of the units here in Fort Lauderdale as are the various pet restrictions (many units in this city do not allow pets at all and those which do all have some sort of restrictions on breed types if not also weight).
There are, in some places, moratoriums on renovation work during parts of the year due to noise issues and in terms of having interior work done, there can be numerous rules and regulations as to materials approval (think sound deadening materials required for floors) the inability to penetrate floors and ceilings, etc.
Parking? Interior is much preferred in this state where the effects of sunlight can be devastating to automobiles; the number of parking spaces allotted and whether or not those spaces are deeded or assigned and whether or not additional spaces can be purchased (there is a high rise down the beach from us in which additional spaces can cost as much as $60-70,000).
There are, in some places, moratoriums on renovation work during parts of the year due to noise issues and in terms of having interior work done, there can be numerous rules and regulations as to materials approval (think sound deadening materials required for floors) the inability to penetrate floors and ceilings, etc.
Parking? Interior is much preferred in this state where the effects of sunlight can be devastating to automobiles; the number of parking spaces allotted and whether or not those spaces are deeded or assigned and whether or not additional spaces can be purchased (there is a high rise down the beach from us in which additional spaces can cost as much as $60-70,000).
Apr 4th, 2015, 06:18 AM
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Thank you Dukey and Ackislander. I will be printing this out for her to take next week when they will be looking at units. Dukey, "(think sound deadening materials required for floors)" this reminded me of the time we rented a condo at the beach on ground floor and the upstairs unit had hardwood floors. It made for an awful week, the noise was maddening.
Apr 4th, 2015, 07:23 AM
#6
There are various grades of soundproofing for underneath hardwood which is laid down over concrete. The condo would, or should, have some sort of minimal requirements and often they require a sample to be submitted in advance.
Apr 4th, 2015, 07:28 AM
#7
Almost forgot: to make things possibly easier I would advise your daughter and SIL to specifically ask the condo folks if there exists a set of written rules and regulations they can review. AND, if these are available the most recent updating should be evident. Also, they should ask if a personal interview is required and, if so, the schedule for those interviews. These "encounters" are often conducted to make certain the potential owners are aware of the "rules and regulations" as opposed to seeing if they have pink skin and blue eyes and/or if they attend a synagogue or a church.
Apr 4th, 2015, 07:38 AM
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You've gotten some excellent advice.
Anther thing your daughter and SIL should do is a simple google search using such topics as: "Buying a condo", "Buying a Condo in Florida", "things to know about buying a condo", "Condo ownership" - they'll find hundreds of links telling everything you could ever want to know about purchasing a condo - the good, the bad and the ugly.
The more first hand research they can do, the better.
Anther thing your daughter and SIL should do is a simple google search using such topics as: "Buying a condo", "Buying a Condo in Florida", "things to know about buying a condo", "Condo ownership" - they'll find hundreds of links telling everything you could ever want to know about purchasing a condo - the good, the bad and the ugly.
The more first hand research they can do, the better.
Apr 4th, 2015, 08:00 AM
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Thanks RoamsAround, to Google "Buying a Condo in Florida" would be a good one to Google. DH and I can be of some help as we live in a condo and DH is on the board but it's not located in Florida and that does make a difference.
Dukey, I'm a little confused about the personal interview. Would this be with the HOA board or with the sellers and would it be a sneaky way some have of determining race, color and creed ?
Dukey, I'm a little confused about the personal interview. Would this be with the HOA board or with the sellers and would it be a sneaky way some have of determining race, color and creed ?
Apr 4th, 2015, 11:04 AM
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I don't think anyone mentioned "special assessments". Your daughter and SIL should find out about these for any condo they are considering. This year our special assessment was $400, but the previous 3 years it was almost $1000 each year. Interestingly, when an owner asked why not simply roll special assessments into the HOA he was told that this would make the condo less attractive to a buyer, so in our case at least the special assessment keeps the HOA artificially low.
Apr 4th, 2015, 11:16 AM
#11
I think you need to remember a couple of things. The condo we used to own required an in-person interview before the sale could be finalized. The interview was conducted for the specific purpose of determining whether or not we knew and understood the various written rules and we were asked to execute a document to that effect.
We knew there was no way we could be excluded because of our sexual orientation or marital status or our ethnic backgrounds. I suppose what MIGHT happen in some instances would be if a potential buyer did not meet the age requirements which do exist in some condos such as the one here in Fort Lauderdale which specifically excludes anyone under the age of 55.
To more directly answer the question you posed to me: the interview was required by the condo association and not by the seller. The seller simply wanted his MONEY; it was the association which was more concerned about the particulars regarding us, the buyers.
As to special assessments, I agree that is a good question to ask in terms of the history of any special assessments that have been levied and the reason they WERE levied. Our previous condo prided itself on the fact that a special assessment had never been levied for any reason whatsoever and that may very well be related to the amount of financial reserves the condo has maintained. It is also GREATLY affected by the efficiency of the management which in our case was carried out by a company which specializes in condo management and manages a variety of condos all over southeast Florida.
We knew there was no way we could be excluded because of our sexual orientation or marital status or our ethnic backgrounds. I suppose what MIGHT happen in some instances would be if a potential buyer did not meet the age requirements which do exist in some condos such as the one here in Fort Lauderdale which specifically excludes anyone under the age of 55.
To more directly answer the question you posed to me: the interview was required by the condo association and not by the seller. The seller simply wanted his MONEY; it was the association which was more concerned about the particulars regarding us, the buyers.
As to special assessments, I agree that is a good question to ask in terms of the history of any special assessments that have been levied and the reason they WERE levied. Our previous condo prided itself on the fact that a special assessment had never been levied for any reason whatsoever and that may very well be related to the amount of financial reserves the condo has maintained. It is also GREATLY affected by the efficiency of the management which in our case was carried out by a company which specializes in condo management and manages a variety of condos all over southeast Florida.
Apr 4th, 2015, 11:22 AM
#12
And one more thing: maintenance fees. These are not tax deductible as far as I have ever known and they rarely go down. The buyers might ask to see a history of the condo fees.
I can tell you that condo fees in the part of Florida where we live seem much much more expensive than some of the ones we would have paid had we moved to a condo in San Diego where we really thought we were going to end up.
Any real estate agent should be able to tell potential buyers what the average condo fees are in the area of interest or at least what the average condo fees are for the price range the buyer feels is affordable.
Oh, yeah...security! Is the intended buyer planning to live in the condo "seasonally" (i.e., snowbirds) or year-round? Security can vary widely between buildings.
I can tell you that condo fees in the part of Florida where we live seem much much more expensive than some of the ones we would have paid had we moved to a condo in San Diego where we really thought we were going to end up.
Any real estate agent should be able to tell potential buyers what the average condo fees are in the area of interest or at least what the average condo fees are for the price range the buyer feels is affordable.
Oh, yeah...security! Is the intended buyer planning to live in the condo "seasonally" (i.e., snowbirds) or year-round? Security can vary widely between buildings.
Apr 4th, 2015, 02:13 PM
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The condo will be a vacation beach house. It will be rented out whenever family members are not using it.
Susan, asking about special assessments is a good question to ask.
Dukey on those maintenance/condo fees, will our daughter be able to ask to see if everyone is current on their fees? If everyone is not current, everyone suffers
Susan, asking about special assessments is a good question to ask.
Dukey on those maintenance/condo fees, will our daughter be able to ask to see if everyone is current on their fees? If everyone is not current, everyone suffers
Apr 4th, 2015, 04:45 PM
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Regarding condo rentals - Your daughter & SIL should keep in mind that winter is the peak time for condo rentals in Florida. If they and other family members plan to use the condo during that time period they will be limiting it's availability in the most lucrative rental period.
As part of their due diligence, they should talk with potential "condo rental management companies" to get some idea of what the rental market is like in the area, the range of rental rates for similar condos, what they charge for management fees and rental commissions, what they can expect to pay for refurbishment, upkeep, maintenance, cleaning, and wear and tear caused by the tenants.
As part of their due diligence, they should talk with potential "condo rental management companies" to get some idea of what the rental market is like in the area, the range of rental rates for similar condos, what they charge for management fees and rental commissions, what they can expect to pay for refurbishment, upkeep, maintenance, cleaning, and wear and tear caused by the tenants.
Apr 4th, 2015, 05:44 PM
#15
I would assume the management of the condo would be willing to share the information as to how many people are behind on payments but I would NOT count on that and I do not know if this would be information they are required to share.
Someone above mentioned financing and my understanding is that banks usually like to see buildings with only a certain percentage of rentals and if that percentage rises to a certain point, as was pointed out, mortgage financing may become more difficult to obtain.
If they are going to rent out the unit then I suggest they become aware of the tax issues regarding that income as well as the possibility of having to pay "use" taxes and go here for an explanation of that: http://dor.myflorida.com/dor/forms/current/gt800034.pdf
They also need to be fully aware of any depreciation they might be eligible to write off, etc.
Someone above mentioned financing and my understanding is that banks usually like to see buildings with only a certain percentage of rentals and if that percentage rises to a certain point, as was pointed out, mortgage financing may become more difficult to obtain.
If they are going to rent out the unit then I suggest they become aware of the tax issues regarding that income as well as the possibility of having to pay "use" taxes and go here for an explanation of that: http://dor.myflorida.com/dor/forms/current/gt800034.pdf
They also need to be fully aware of any depreciation they might be eligible to write off, etc.
Apr 5th, 2015, 03:23 AM
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This is one of the times I wish we had "sticky" posts. This information is too good to lose!
Do note that if they are planning to rent, they need to be absolutely sure they CAN rent. Our condo could not be rented for less than three months at a time, and there was a several hundred $ fee to the association for each rental.
Believe me, restrictive condo associations have heard or seen all the ways you might try to get around restrictions, e.g. " friends" or " cousins" occupying your unit, and they may aggressively fine violators. Will you have to pay the fines? Yes, because they can get a lien on the property for fines and penalties that come off the top when the owner sells.
There are plenty of buildings and associations where rentals are permitted. Just make sure you buy in one if that is part of your plan, though RoamsAround and Dukey both raise good points on season and taxes. The season is of course different in North Florida and the Panhandle than it is in South Florida on either coast.
Do note that if they are planning to rent, they need to be absolutely sure they CAN rent. Our condo could not be rented for less than three months at a time, and there was a several hundred $ fee to the association for each rental.
Believe me, restrictive condo associations have heard or seen all the ways you might try to get around restrictions, e.g. " friends" or " cousins" occupying your unit, and they may aggressively fine violators. Will you have to pay the fines? Yes, because they can get a lien on the property for fines and penalties that come off the top when the owner sells.
There are plenty of buildings and associations where rentals are permitted. Just make sure you buy in one if that is part of your plan, though RoamsAround and Dukey both raise good points on season and taxes. The season is of course different in North Florida and the Panhandle than it is in South Florida on either coast.
Apr 20th, 2015, 06:37 AM
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Just an update. Daughter and SIL spent a week in Florida and found the condo they would have loved to purchase. They had already been pre-qualified by their bank before they left. However, the unit they wanted was not for sale to them. It was in a building that required more units to be owner occupied then for rent and since they were buying for vacation purposes they could not buy it. They even had the realtor they were working with try a local bank, but no go.
Apr 20th, 2015, 07:57 AM
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Be aware that both flood and windstorm insurance will probably face major changes in coming years. The Congress has already started scaling back federal government subsidized flood insurance through the National Flood Insurance Program. For Florida condos, you face continuing moves by the Florida legislature to shrink the exposure of the state entity which provides much of the windstorm coverage in Florida, the Citizens insurance company. Who knows how this will all turn out? But your condo association could face significant increases for flood and hurricane coverage in the future.
Re assessment: friends of ours here in Key West luckily sold their condo in a very nice beachside complex just before a major assessment was imposed by the association. Why? Spalling throughout the structure. The problem apparently had been spotted during one of the periodic structural checks of the complex but the association officers had dragged their feet. Well, spalling in Florida doesn't wait for condo associations to make up their minds! End of story: $45,000 additional assessment on every condo owner for massive reconstruction of many parts of the exterior of the building. Ouch.
Suggestion: have you thought of renting instead of buying? Renting doesn't have quite the emotional tug of owning a little bit of Florida sunshine, but you sidestep all of the issues which so many posters have talked about. And you can relax in your beautiful rented condo. Even if you pay top dollar for Jan-Feb-March, you may still come out ahead compared with buying. Just a thought FWIW.
Re assessment: friends of ours here in Key West luckily sold their condo in a very nice beachside complex just before a major assessment was imposed by the association. Why? Spalling throughout the structure. The problem apparently had been spotted during one of the periodic structural checks of the complex but the association officers had dragged their feet. Well, spalling in Florida doesn't wait for condo associations to make up their minds! End of story: $45,000 additional assessment on every condo owner for massive reconstruction of many parts of the exterior of the building. Ouch.
Suggestion: have you thought of renting instead of buying? Renting doesn't have quite the emotional tug of owning a little bit of Florida sunshine, but you sidestep all of the issues which so many posters have talked about. And you can relax in your beautiful rented condo. Even if you pay top dollar for Jan-Feb-March, you may still come out ahead compared with buying. Just a thought FWIW.
Apr 20th, 2015, 09:17 AM
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For anyone considering buying a condo or co-op the interviw of the prspective owners by the board or the interview committee is a standard requirement before th unit can be bought.
The purpose is not to discriminate in any way but to determine that:
1) the prospective owners understand the rules under which they will be living, including their rights and responsabilities (much of this is often a surprise to those used to living in a private house)
2) to try to elicit any information which may indicate that the prospective owners are not being honest about any number of issues: who and how many the residents will be, the fact that any subletting would be only under the rules of the condo/co-op, that they don;t have inappropriate pets etc.
Our board turned down a prospective owners - a 50ish couple - who had said they wanted the apartment for a pied a terre in Manhattan, when in fact they wanted it to house their 18 year old daughter - and a roommate to be named later - who were starting college there. If they had been honest about this we might have considered approval - but the daughter did not appear for the interview and the roommate was a completely unknown quantity. We asked them to reapply when both young women would be available and could provide references - but they never followed up.
The purpose is not to discriminate in any way but to determine that:
1) the prospective owners understand the rules under which they will be living, including their rights and responsabilities (much of this is often a surprise to those used to living in a private house)
2) to try to elicit any information which may indicate that the prospective owners are not being honest about any number of issues: who and how many the residents will be, the fact that any subletting would be only under the rules of the condo/co-op, that they don;t have inappropriate pets etc.
Our board turned down a prospective owners - a 50ish couple - who had said they wanted the apartment for a pied a terre in Manhattan, when in fact they wanted it to house their 18 year old daughter - and a roommate to be named later - who were starting college there. If they had been honest about this we might have considered approval - but the daughter did not appear for the interview and the roommate was a completely unknown quantity. We asked them to reapply when both young women would be available and could provide references - but they never followed up.
