Buying Into A Common Interest Community: The Basics

by Barry Rosa, Vice President Prudential Connecticut Realty

You've decided to take a look at one of the age-restricted 55+ communities, but you are coming from a traditional single-family home.  In fact, like many of us, you have never owned a property that is regulated by a community or homeowner's association.  There are some things that we all need to know before purchasing in a common interest community.

Many of the new (and existing) age-restricted communities, such as condominiums, are organized in the common interest legal format; while others may be governed by a homeowner's association.  Governance is less about the type of property (single-family vs. a town house) and more about the legal form of ownership.

Here's a quick shopping list of things that you should know and areas to investigate when considering a common interest community.  It is also wise to ask your real estate agent for help when considering this type of move.

The State has a law called The Common Interest Ownership Act.  Among other things, it regulates what information a buyer must be given by the Association (of the community you are considering) or the developer.  In many cases there is a "right of rescission."  This means that after receiving the legal documents, including governance rules and regulations, you have the right to cancel the purchase if anything contained in the documents is unsatisfactory to you.

Needless to say, reading the documents is a good place to start.  These documents are often large, and written with a great deal of legalese and technical terms - but plow through them!

Here is the basic information that you need to know:

1)  What are the responsibilities of the Association?  Quite often, all exterior maintenance and landscaping are done by the Association on behalf of the owners.

2) What do the rules and regulations (often called by-laws) say about what you, as an owner, can and cannot do?  A simple example: There may be regulations on the type of changes that you can make to the outside of your home.  There may also be regulations on how long a guest can stay in your home.

3)  There will be a budget that requires you to pay a monthly fee to the Association.  It is extremely important to take a careful and slow look at this document.

The budget generally covers all of the association expenses that are common to the homeowners.  It can often include landscaping, snow removal, insurance on the common areas, maintenance on the exteriors of the home and other expenses.  Each budget for each community is different based on what's included.  The total amount of the budget is apportioned among all of the homeowners and that becomes the monthly common charge.

The budget should also include reserves for capital items.  This is very important.  For example, let's say the roofs on the homes are a common expense in this community (in other words, the cost of roof repair or replacement is paid for by the Association).  The roofs will need to be replaced in 20 years at an estimated cost of $250,000.  If the roof has an estimated remaining life of 18 years, it stands to reason that $12,500 per year should be set aside in a capital replacement fund (reserves).  If this budget has no capital reserves, it may result in a special assessment that will be levied against each homeowner later on.  Be ready for it, if this is the case.  Coming from a traditional home, we all know that we need to set aside money for repairs and replacement.  A common interest community is no different, but it is done in common.

Are there other things that you need to know?  Of course, this is but a brief review of some of the more important of them.  Quite often moving to a common interest community can be a culture shock, especially in terms of rules and regulations.  Do your homework, ask for your real estate agent for help, consult your attorney for legal matters.  Change is good.  Just be sure to understand what the differences are.

Copyright 2006.  All rights reserved.

Barry Rosa is the Vice President of New Homes and Land and Active Adult Specialist Divisions of Prudential Connecticut Realty.  He can be reached at (860) 571-6690, or (800) 571-6690; or at brosa@prudentialct.com

Comments

[roof repair]

I recently came across your blog and have been reading about roof repair. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

[Maureen Brubaker]

That's a great comment, JoAnn. Very helpful, and much appreciated.

[JoAnn L. Bredenberg, Realtor, SRES]

-New buyers, 55-70, want big (2,000+) open floor plans with a master bedroom on first floor a must, and guest rooms.
-High cabinet counters and high toilets are appreciated, with grab bars that don't look too institutional.
-Attached garages afford safer passage into the home, and are worth the premium as it prolongs one's ability to stay in the new active adult home.
-There is a huge gap between lower priced buyers ($120,000 - $250,000.) and the upper end.
-Not all retirees have pensions, and many have lost life savings in the most recent stock market crash and "mishandling of funds", cautioning one to respect a customer's need to be frugal.
-Maintenance fees of newer complexes are including less, some not even exterior of building, just grounds.
-Gyms are in more demand than pools and tennis courts in the past.
-Buyers would like an option to join an on-site club rather than paying huge fees but not use the facilities.
-Place for "office", computer room in demand. Often, a closet can be converted into a computer/workcenter which can be closed behind the closet doors when not in use. A comfortable chair-height stool works best because it can slide completely under the desk enabling the closet door to close completely.
-Cable wiring for DSL big item.
-Minibus is a big feature, especially since many town budgets are tight and transportation grants are scarce.
-Seniors are worried about slabs instead of basements because of leaks, dampness, and colder air around legs.
-It is less emotional to move that prized, but too-big item, into the new home and then remove it later when one is sure it "has to go".
-If adult children are accompanying their parents when looking, try to have a private meeting with parents to make sure the decisions are the parents'. A happy occupant is top priority.
-Natural light, bright sunlight, shining into the unit is good medicine as well as the ability to get outside safely, such as a deck or patio. I have witnessed instant depression in a relative whose children pushed into a high-rise with no easy way to get outdoors. If the unit of choice does not get good light, install extra and/or indirect lighting controlled by one switch in the dark rooms and corners. If your loved one does not have an easy way to get outside, make that part of visits.
-Remember, visits don't have to be big productions. Some of the most cherished visits are staying at home and chatting, watching a movie, doing routine family things.