In Minnesota when you purchase a townhome or condominium most of the time you will include a CIC (Common Interest Community) Addendum. Simply stated, this addendum gives the buyer 10 days to review the community’s financial documents, rules and regulations, articles of incorporation, etc. These documents come along with a resale certificate that let’s the buyer know that all association fees and assessments are paid up to date.
When you look at the property originally the MLS listing will give you some information as to what the association fees are, whether you can have pets, whether rentals are allowed, etc. But it’s always good to have time to review the actual documents to insure you know the details. Here’s some items to take note of:
Does the Association allow Rentals: If the association allows rentals may be of interest to you. Some buyers don’t want to purchase in a community that does. Others may want to keep the property and rent it out once they move on to a single-family home. Some associations only allow a certain percentage of the units to be rented.
Does the Association allow Pets: Buyers how want to have pets at these properties need to know whether the association allow them. If they do allow pets, what kinds are allowed, what size can they be, and how many of each can you have. Some associations don’t allow certain breeds.
Is the Financial Position of the Association Solid: Many buyer’s eyes glaze over when they look at a sheet full of numbers. The important questions here are:
- Does the association have enough money in it’s accounts to cover expenses (budgets will be included in the documents you receive)?
- If the properties look like they will need updating to siding, decks, or other items you will want to know who pays for these items and if the association has enough money in reserves to pay for them without having to assess the property owners.
- The same holds true for property damage. If there were a hail storm and the roof needed to be replaced, is there enough in reserves to pay the deductible without assessing the property owners?
Other Items to Consider when Purchasing a Townhome/Condo: What if you were a single owner and wanted to rent out one of your rooms? Say you had a truck and a car and both would not fit into the garage. Could you park one in the driveway or guest parking spots overnight? How many days could guests stay over? All of these and more are covered in the documents you receive during this 10-day review period.
Should you discover items in the resale disclosure package that makes you rethink your purchase, you are allowed to cancel the purchase and receive your earnest money back. You must ensure at the beginning however that the association is part of the Minnesota Common Interest Ownership Act. Or just ask your Realtor.
For more information about purchasing townhomes in the greater Minneapolis area, contact Realtor Dan Kokesh.