Condo Association Basics: What Every Buyer Should Know

February 10, 2009


Condos in All Shapes and Sizes...But They All Have Associations
Condos in All Shapes and Sizes…But They All Have Associations

We all know that the major type of property changing hands and being built in the city of Chicago is Property Type-2.  The formal term is Single Family Attached and what most people call a condominium or townhouse.  With condominiums you will more than likely find a condominium association.  Condominium associations are set up to maintain the building and therefore maintain or improve property values. With the association comes fees which are called assessments. They are usually a monthly bill the owners have to pay so the association can pay for the exterior building insurance, building exterior maintenance, grounds upkeep, water, common area electricity use, and possibly trash removal.  (In Chicago, if the building has four or less units, trash removal is payed by the city.) Other possible expenses that would be covered by the assessment include door people, management company fees, maintenance person, elevator service, etc.

Decs & Bylaws, Rules & Regs

The typical association is set up by the original developer of the building, whether it be new construction or gut rehab. With the condo association there should be formal legal document called the condominium declarations (often called decs & bylaws), which describe the property, percentage of ownership, limited common elements such as hallways, parking, etc.  There will also be another formal legal document called the rules and regulations (commonly called rules & regs); they lay out what can and cannot be done in and around the building.  Examples of rules and regs are pets rules, pet weight limits, use of common areas, and even restrictions on smoking to name just a few.

Condominium Associations can be self managed or run by a management company.  Typically a smaller association will run itself.  This means each unit owner will more than likely take a roll in the management of the building. Electing a president, secretary, and most importantly the treasurer.  The treasurer is the person responsible for book keeping, paying bills, and making sure everyone turns in their monthly assessment on time. 

Small vs. Large Buildings and Associations

Smaller associations tend to have lower assessments.  This is great for the cash strapped buyer.  However, the buyer beware! If the association is not putting enough money away to adequately pay for regular expenses and even worse, the occasional problem, there is a high probability the building will see a special assessment.  A special assessment may be levied against a unit for many items. A common one is having to put on a new roof.  This can be quite costly.  If the unit owner does not pay the assessment a lien can be placed on unit.  The lein will prohibit the owner from selling or refinancing the unit.  There is something to be said for strength in numbers.

With a larger association the buyer will run into higher monthly assessments.  This can be a good thing or a bad thing.  In a full amenity building the assessments can run to $1,500 per month or even higher.  This is especially true in older and vintage buildings that require relatively more maintenance than newer buildings. With larger buildings, the association will be run by a management company.  Depending on the management company, their fees can add quite a bit to the monthly assessment.  But, if you want a well run building you have to be willing to pay for it.  If the building is not well run, you at risk of your asset (home) depreciating.

Eight Questions to Ask Before Buying a Condo

My advice when out condo shopping is simple: ask as many questions as possible.  Here are my top questions:

  1. What are the assessments?
  2. What do the assessments pay for? What don’t they pay for?
  3. Is the building self-managed?
  4. If the building is managed by a property management company, what is the company? (Do some research and find out if they are reputable.)
  5. How much money is in reserves?
  6. Are there any special assessments now or expected?
  7. Has there been any updating to the building, and if so, did the association do a special assessment or did they use funds from reserves?
  8. Are there any pending lawsuits against the association?

Many first-time condo and townhouse buyers don’t completely understand what they’re getting into. It’s not bad, but it is something that should be understood completely before signing the mountain of papers at the closing!

Photo by Lucius Kwok

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About Katie Anderson

Katie Anderson is a respected and successful broker at Sudler Sotheby's Realty as well as a certified appraiser. She specializes in representing clients who purchase and sell condominiums, town homes, single-family homes and income property in the Chicago land area. In her small amount time in the real estate game (she became an agent in 2003) she has assisted in excess of 400 deals and over $200 million in sales and continues to use her skills as a certified appraiser. Katie resides in Chicago's Bucktown neighborhood with her loving husband and 4-year-old-daughter, where she spends much of her spare time with her family and friends. You can contact her at or at

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8 Responses to “Condo Association Basics: What Every Buyer Should Know”

  1. Condo Owners Blog Says:

    Its also important to check the condo association’s insurance policy and debt obligations, which may be through an outstanding condo association loan.

  2. Brad Walbrun Says:

    Great post, Katie. I’d like to add that somebody looking to purchase a condo will likely have to put down a minimum of 10%.

  3. leigh Says:

    I live in a afirly large building and we have a management company> The developer still owns the majority of seats but there is a Condo Board but to my knowledge no one has a title or knows what they are doing.
    Can you please tell me the best way to find out if what they are doing is productive? What books I can reada? What are my rights as a tenant when it comes to the Condo board which consists of the developer and about 3 tenants right now. I am just very confused because one of the Condo Board Members is a control person and thinks she is “in charge” of certain things like the the concierge, lobby, bikeroom.. etc and is not sitting right with me. If I could I would fire her because she is making things difficult fo the people who work here and in return they are unhappy. Help!

  4. HOA Loans Says:

    Be very careful when checking the condo association budget. Look out for other condo owners payment history. If the association has probelsm collecting, it could mean cash flow isseues.


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