Article on Condo Living Written by KG&H Member Published in Hartford Courant

Is condo living for you?  by: Linda Clifford Hadley
Hartford Courant, July 11, 2003

As an attorney who has represented condominium associations and individuals who have purchased and sold condos and served on the Boards of condo associations, I have been witness to many different condominium experiences. As a former condominium owner, I have first-hand knowledge of some of the advantages and disadvantages of this type of home ownership. I have also been involved in litigation on behalf of owners and associations, so I have anecdotal evidence of what can "go wrong." I have informally polled current and former clients, mortgage lenders and insurance agents with first-hand condo experiences to assist in writing this piece. Routinely asked questions are answered below.

My wife and I are thinking about buying a condo as an investment. We would live in the condo for the first couple of years, then rent it when we are ready to buy a house. Is this a good idea?

Condos often make good investments but you need to find out in advance whether the association will permit you to rent your unit. The Bylaws which govern the business of the Condominium Association (the membership of which consists of all of the owners in a project) may prohibit non-owner occupancy of your unit, so that renting the unit may not be permitted. In addition, if you advise your Lender that you intend to occupy the unit as your primary residence when you purchase, the terms of your loan are more favorable since it is "owner-occupied." You are obligated by the terms of your mortgage documentation to notify the Lender if you cease to occupy the property as your primary residence. That could result in an increase in the interest rate; and a default if you fail to notify the Lender of the status of the property. There are also serious considerations associated with being a Landlord: If the tenant should fail to pay rent, will you have sufficient reserves to pay the mortgage while you pursue an eviction action? Are you willing to run out in the middle of the night to repair the hot water heater if you get a panicked call from your tenant? Will an unhappy tenant vandalize the property when moving out? These are significant concerns. Many people have found that with good reliable tenants, owning rental property can be financially rewarding.

I'm thinking about moving into a condo but I love animals and all my friends tell me that most associations don't allow pets. Is that true?

The Bylaws are not uniform for all condo associations, so you are not out of luck. Some Associations permit pets, but most do have limitations. For example, the author has seen the following permitted: "one dog, one cat or one caged bird" or "up to two pets, provided that no outdoor cages, runs or doghouses are permitted." If you are the kind of person who wants to let your dogs run without a leash, condo living is probably not for you. If you have a houseful of cats, it is likely that you will only be permitted to retain one or two of them if you move into a condo. If you have a dog that barks, expect to get complaints from your neighbors and remember that the Association can fine you if you fail to observe the bylaws regarding picking up after your dog or allowing your dog to run free. Connecticut law (CGS 47-270) provides that even after you have signed a Purchase and Sales Agreement, you have the right to rescind the agreement until five days after you or your attorney have been provided with the Resale Package. The Resale Package includes the Condominium Declaration and the Bylaws, budget information regarding anticipated capital expenditures and reserves, information about any judgments or suits affecting the association and other useful information. The Bylaws will include the applicable restrictions on pets. Read the Bylaws carefully to make sure you know the rules before you buy. The documents also let you know what type of amenities are included with ownership and the monthly fee. The Seller is obligated to deliver this document to the prospective purchaser. While it may look daunting, be sure to look it over and seek legal advice immediately (remember, you only have 5 days to rescind; 15 days if it's a new project) if you have concerns before you proceed with the purchase.

What kind of insurance do you get with a condo? I think my lawyer said I can't get fire insurance because the structure isn't owned by me.

Most licensed insurance agents will be able to provide you with a policy tailored for condo owners. The Association maintains fire and casualty insurance, and is obligated to provide you with a certificate evidencing that. Your Lender will require it at the time of purchase. You will need to obtain liability insurance and insurance on your contents. In most cases, condominium units are not freestanding units and will not be insured as such by you. The Declaration outlines the unit boundaries and this will assist you and your insurance agent in determining the coverage required. Part of your condo fees go to pay the premium for the insurance maintained by the Association. It's also a good idea to make sure that the Association has D&O (Director's and Officer's) liability insurance if you intend to serve on the Board. This will cover you if a disgruntled owner sues you as a member of the Board for something he thinks is unauthorized or unfair.

Who mows the lawn? Do I have to pay for that? Can I change the shrubs and plantings in the front if I don't like what's there? Can I add a window box?

The Association typically takes care of the lawn and plantings. This is a big benefit for people who don't enjoy yard work. The monthly fees pay the management company or landscaping firm who is hired to do this. Whether you can change the shrubbery or plantings at your own expense depends on the bylaws. You may be able to ask the Board for permission to make changes that affect the exterior of your unit, such as a window box, but be certain to make the request in accordance with the bylaws and wait for a ruling. Even if you feel you are improving your Unit, you could face fines for doing so without the proper permission. You will also have spent money for a window box that you may have to remove.

Should I serve on the Board? Are there any paid Board members?

Serving on the Board of your Association is an unpaid, and often thankless, job. It is commendable that you are interested in serving but it does require dedication and a general sense of fairness. On the other hand, it gives you an inside view of what's going on at your condominium complex, and it keeps you informed about issues of concern facing the other owners. The Board makes decisions concerning the budget, deals with delinquent members, and enforces the Bylaws. The Bylaws typically specify the terms of election and the duties of the various Board members.

Do I have to get permission before I sell the Unit? Does the Association have any right to set the asking price?

Unless there is a right of first refusal reserved by the Declarant or the Association, you can sell your unit as you would a single family home. You can determine if any written restrictions apply by contacting the Board or your own attorney. You may sell it on your own or use a realtor, with the only restriction that "For Sale" signs are generally not permitted on the front lawn. You can set your own asking price, although if there are comparable units in the same complex for sale, that may assist you in setting the price. Don't forget that you are obligated to provide the Resale Package to the purchaser.

Linda Hadley is a member of Krasow, Garlick & Hadley LLC, a Hartford law firm with a focus on real estate, commercial law and litigation. She is on the Board of Directors of the Connecticut Mortgage Bankers Association and enjoys representing condominium owners and associations. She is grateful to Bob Furman of L.W. Button & Son Insurance Agency for his assistance and advice on the insurance issues covered by this article. Portions of this article were edited prior to publication.

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