Condo/Townhouse Info

Condos and Townhouses in the Central Contra Costa area have become a popular choice for many buyers purchasing a home in recent years. They offer a lower price for similar size compared with single family detached homes, and the benefits of having many of the maintenance issues of homeownership handled by a homeowner’s association (HOA) are also attractive to many buyers. They have attracted a wide demographic of people, from first time homebuyers that find them more affordable in a particular area than a detached home, to retirees who want less maintenance and more time to enjoy themselves, and need less space.

How HOA’s operate

Generally a Homeowner’s Association has a Board of Directors, which is a group of owners elected by the full ownership interest of the community to make decisions on behalf of the community. Depending on the size of the association, most Boards include 5 -7 members. Most Homeowner’s Associations collect monthly dues from the owners in the development, and in turn pay for the monthly costs of maintaining the common areas in the development, as well as hold money in reserves for larger projects to be done at a later time. Monthly fees can include landscaping, pool maintenance, electricity for common areas, water, ongoing basic repairs, and management fees, etc. There should be enough money to put aside from the owner’s dues into a reserve fund, which is scheduled to pay for larger projects such as painting, fencing, pool resurfacing, roof replacement, etc. Every few years, the association should complete a reserve study which shows the replacement date and life expectancy of all major costs the association is responsible for. It is important to review this document to insure that there are no “red flags” as to items that have not been completed as scheduled, or if there appear to be insufficient funds for upcoming major projects. If a major project is required, but there are not enough funds to complete the project, the board of directors may institute a “special assessment”, or additional fees to all homeowners within the community. The CC&R’s (Covenants, Conditions and Restrictions) of the community authorizes the HOA to institute a special assessment, and they can be quite painful, depending on the situation.

Benefits of Owning a Condo or Townhouse

There are many advantages to owning a condo or townhouse in well-maintained community. including:

  • Most have community facilities such as pools, playgrounds, clubhouses and tennis courts for use by owners in the community.
  • Exterior maintenance and landscaping are generally cared for by the association
  • The price point of condos and townhouses makes them much more comfortable in size and location than similarly priced detached homes
  • Those that enjoy close knit relationships with their neighbors will have many opportunities to meet new people and forge new relationships.
  • Maintenance costs are much more predictable as individual owners responsibilities are generally limited to their own interior spaces.

While there are many benefits to owning a condo or townhouse, there are also potential pitfalls. Some of the items to be aware of and questions to ask when considering the purchase of a condo or townhouse include:

  • Does the HOA have adequate reserves, or are their reserves adequately funded?
  • Are there any existing or potential lawsuits against the builder or other entity regarding construction defects?
  • Are there any current or pending large repair projects coming up? If so, at what stage are they in? It’s a red flag if an HOA has large projects pending while you are considering a purchase. Cost overruns are common, and if the HOA doesn’t have enough funds in reserve to cover any overages, they could institute a special assessment to cover the cost.
  • What percentage of renters does the complex have? If it’s more than 40%, lenders will likely shy away from it, and there is a greater likelihood of problems, as tenants generally don’t take care of their properties quite as well as owners typically do.