Buying property is a complicated process no matter where you’re looking. If you’re in the high-rise condo market — whether that’s for the first time or the first time in a long time — you’ve probably encountered some confusing elements here and there.
From HOA fees to condo insurance and much in between, here are answers to some of the most common questions we get.
HOA stands for homeowners association, which is the group of people (usually residents) who run a given property like a high-rise condo building. The fees are typically paid monthly and are put towards the maintenance and improvement of the property and its amenities. While HOA fees can vary greatly from property to property, they often range between $200 and $300 a month.
FHA loans are loans that are insured by the Federal Housing Administration, or the FHA for short. The loans that they offer are generally meant for first-time home buyers or those who haven’t owned property in the last several years. An FHA approved condo means that it can be purchased with an FHA loan that can require as little as 3.5 percent down.
HO6 insurance is essentially homeowners insurance for condo or co-op units. As the owner, you’re likely responsible for any damages that occur within your unit. While the HOA or another entity is likely responsible for insuring common areas under a type of collective insurance, you’re responsible for insuring your unit and everything inside it. That’s what HO6 insurance does: it generally covers policy holders for everything from smoke damage to personal liability and property theft.
Speaking of co-ops, what exactly are they? Well, in many ways they’re incredibly similar to, while also being distinctly different from, regular condos. First, they’re both multi-unit buildings that, from the outside, can seem identical. The differences have to do with ownership.
A condo is generally a private residence within a multi-unit building in which you own your individual unit and have access to shared common areas. In a co-op situation, you have an interest or share in the entire building as a whole and simply a contract that allows you to occupy one of the building’s units. Thus, the central difference is that a condo owner owns their individual unit and a co-op owner does not. Instead, co-ops are collectively and cooperatively owned and managed by the residents often through a nonprofit corporation structure.
Have you seen the word “condotel” pop up in your condo search and not sure what it means? We’re here to help! It’s pretty straightforward, actually. A condotel is a hybrid property that houses both hotel rooms and residential units. If you’ve been looking at properties owned by St. Regis, for example, chances are you’re looking at a condotel.
While some people prefer an entirely residential building, others love the bustle and amenities (think on-site bars and restaurants) that many condotels offer.
Unlike condos and co-ops, there are more differences than similarities between condos and townhouses. Condos tend to be more similar to apartment buildings where a number of units are housed in one building. Townhouses, on the other hand, tend to look more like regular homes that are often attached to one another and clustered in the same area of a development.
Like condos, though, townhouses are owned by their residents just like single-family homes are. Unlike condo units, townhome owners are often responsible for more maintenance like yard work when compared to condo owners.
Deeded parking is parking that is owned by or assigned to a particular condo unit. If your unit comes with deeded parking, that means that you have a dedicated parking space (or sometimes two!) that are all yours to use as and when you please. Essentially, deeded means dedicated to a particular unit.
The alternative to deeded parking is assigned parking. Instead of having a parking place included with your unit, you can choose to add it on through a contract and often an additional payment. In these cases, the HOA generally retains the right to control which spaces are assigned to which units.
Just like special assessments for single-family homes, a special assessment in a condo setting is basically an additional fee to cover the cost of some form of a renovation or to replenish an underfunded reserve account.
The key thing to know about special assessments is that they’re in addition to any HOA or other type of fees you’re already paying. When a less predictable project comes up (think repairing a roof or re-paving cement for example), the money to cover the costs associated with the project is typically produced through a special assessment — an additional fee that everyone in the building has to contribute to and ultimately cover.
While special assessments are annoying to say the least, in a well-run building they should be infrequent.