Aitkin County Town homes,
Condos, Planned Unit Developments-
Offer affordable lakefront, country, or residential living.
Weather you
are thinking
of retirement, investment, or recreational fun,
the
town
home/condo life style may be what you are looking for.
From
Mille Lac
Lake to Big Sandy lake-Aitkin County and all the
surrounding
lakes area
has endless town home/condo opportunities.
Most town home or
condominium developments in the Aitkin Lakes
Area
include as
part of the ownership contract mandatory membership in
some
type of a
governing home owner association. These organizations
are
governed in
Minnesota by
the Minnesota Common Interest Ownership
Act (MCIOA).
These associations have varying power and authority
which are
governed by adopted bylaws. In most cases a Board of
Directors
is
responsible for maintaining a quality of life for the enjoyment of
all
owners. They
are also required to run a fiscally responsible
not-for-profit
organization
and protect the investment of the owners. If not
properly
constructed
or administered, these responsibilities can lead to
disputes
and
liability.
Condo's, town homes and some single-family communities
are
common-interest developments. You own
your unit, or at least everything
on your side of the walls. But you also own a share in
common areas, and
sometimes
also the exterior walls of living units - and you're
responsible
for their
upkeep.
Representation in buying a Condo or
Townhouse
Lakeshore-Residential-Non Lakeshore
You
Need Solid Answers to the Following Questions:
Homeowner
Associations Financials
Buying a Condo or Town home is like buying shares in a
nonprofit
Real Estate holding corporation. You don't just buy a
home, you enter
into a
partnership. Check the Associations financials before buying.
Assessments
What does and doesn't the assessment cover—common
area maintenance,
building
exterior-roof maintenance, recreational facilities, trash
collection,
snow
removal?
Lakeshore-boat docking rights? Spring and fall dock
maintenance.
What special assessments have been mandated in the past
five years?
How much was
each owner responsible for? Some special
assessments
are
unavoidable. But repeated, expensive assessments could be a red
flag
about the
condition of the building or the board's fiscal policy.
Guided by a
board of directors, the HOA manages dues and other
money
collected to
fund the annual budget. Monies are dispersed for repairs
and
upkeep of
common areas, buildings, other structures, landscaping,
lighting,
walks,
paving, pools, decks and the like, and other operating
expenses.
If a
shortfall develops, the HOA looks to homeowners for more
funds,
usually by
special assessment. This one time fee or short-term
increase
to monthly
dues can run thousands of dollars per owner.
Percent
of Reserves Funded
How much does the HOA have in reserves, and what percent of its
obligation
is that?
A part of the HOA's budget called the Reserve Fund, available
from
HOA
management, reveals how much cash is available for future
obligations.
The level of
reserves is based on the size, age, construction
type,
maintenance
level and type of community. The American Institute of
Certified Public Accountants recommend associations
conduct annual
reserve
studies to gauge fiscal fitness, but only a few states mandate
them.
Generally,
if an HOA has 70% or more of the reserves a study said it
needs,
it's in good
condition and there's little chance of an assessment.
With 30% to 70% funding, reserves are in fair condition
and an assessment
may be
needed. Under 30%, the reserves are in poor condition and
an
assessment
is likely.
Is the project in litigation? If the builders or homeowners
are involved
in a
lawsuit, reserves can be depleted quickly.
Owner-Occupancy
& Delinquencies
What percent of living units are owner-occupied?
What percent of owners are 60 days or more delinquent
in
their dues?
Low reserves aren't the only assessment risk. More
owner-occupied
units foster
a community's well-being. With 75% or more units
occupied by
owners, conditions are good. At 60% to 75%, more
upkeep
may be
required. Below 60%, there's a greater risk not only of
extra
assessments,
but less community participation and more infractions
of
association
rules.
Monthly dues fund the HOA budget. If 5% to 10% of dues are late,
it's
a warning
call. More than 10% late is a red flag signaling poor
budget
management
and more risk of assessment.
What covenants, bylaws, and restrictions
govern the property?
What grandfather clauses are in place? You may
find, for instance, that
those who
buy a property after a certain date can't rent out their
units,
but buyers
who bought earlier can. Ask for a copy of the bylaws to
determine if you can live within them. And have an
attorney review
property
docs, including the master deed, for you.
Disclaimer: We are
advising you that the Questions listed are
opinions only. Please
consult your attorney, and/or accountant
for advice and
consulation.
Frequently Asked Questions
Q: What is a Condominium (Condo)?
With a condominium you
own the space within your walls, floors and ceiling
with a common
ownership interest in the common areas,
which are owned by all owners. The
association exists to operate and
manage the common elements. Most
commonly seen condo's are
"stacked" format but may appear in
"town home" style as well.
Q: What is a Townhome?
With a townhome you own the space within your walls and the
ground beneath
the townhome. Row or quad style is the most common.
Usually there are
separate entrances and garages. The lot line normally
bisects the
"party wall" between
the units.
Q: What is a Co-op?
Co-op is a form of ownership. Owner holds a proprietary lease or occupancy
agreement for their living unit. With a co-op the building is thought of as
a company with each owner owning a percent share of the building
based
upon your units value, (Owner owns stock and is a member in the cooperative).
Designated “age over 55” facilities may be specific in identifying their
members.
Q: Planned Unit Development?
Owner owns their lot and the living unit, The association owns:
(i.e.
tennis courts, streets, tot lots, out lots with entrance signs).
A common interest community that is not a condominium cooperative.
Normally identified in a stand-alone-home format. Brought together
for
the purpose of sharing maintenance costs associated with the
limited
common elements or facilities and/ or lots owned
specifically by members of
the association.
Q: Architectural Controlled Community (Conservation Neighborhood)
Same as the single family home neighborhood with specified areas held
out
as “green space” (Conservation Neighborhood-more common space,
fewer homes).
Q: What are Common Elements?
Common elements are the elements of the unit or property that are
shared
and maintained by the association. It is very important
that you
now what is the association's responsibility and yours. Most
exterior elements
are considered common such as roofs, sidings,
walkways and driveways.
However, if you roof leaks and causes damages, your
association may
only be responsible for repairing the roof. Always
check your
association guidelines for the specifics.
Q: Do I need an inspection if I'm buying a Townhome or Condominium?
Definitely. Your inspector will report on the elements that you will
be
responsible for such as cooling and heating systems, electrical
and
plumbing systems as well as walls, ceilings, floors and
structure.
Q: What is an Association?
An association runs and manages the affairs of the buildings. Be
sure
and learn everything you can about the homeowners association
before
you buy into a development governed by one. The association's
financial,
political and legal condition is very important to your
investment and quality of life.
Q: What is an Association Fee?
Association fees are the fees you pay to live in the building. Fees
are
usually paid monthly. If you do not pay the association can take
legal
action and enforce a lien and foreclosure of your unit.
Q: What is a Special Association Assessment?
The association can, according to the association bylaws, levy a special
assessment. If there isn't enough money in reserve accounts for
maintenance
expense, the association can levy special assessment to pay
for it. The
association should be so well run that they should have all
future long
term maintenance items accounted for and reserve accounts
figured in their budget.
Q: What is the Role and Responsibility of the Owners?
The owners elect and/or remove directors, amend governing documents
(some
cannot be amended), and act according to rules and regulations.
Q: What is the Role and Responsibility of the Board of Directors?
The Board makes decisions, has a fiduciary duty to act in the best
interest
of the entire community, financial management of the
association funds,
including reserve funds, sets rules and regulations,
maintains appropriate
insurance as required in the governing documents,
manages association
employees and maintains and enhances the physical
property,
common areas and facilities.
Q: What type of Insurance is needed?
Condominiums usually have a blanket policy or building insurance
and
it is included in the association fee. Coverage for your personal
property
is not included and you would need to get your own insurance. In
townhomes
some associations have a blanket policy and some do not. You would
need
to purchase a separate policy. Be sure and check with your insurance
agent and the association to see what insurance they have and
what
insurance you will need.
Q: Do condos have to be made accessible to the disabled?
The 1990 Americans with Disabilities Act does not require strictly
residential
apartments and single-family homes to be made accessible.
But all new
construction of public accommodations or commercial projects
(such as a government building or a shopping mall) must be
accessible.
New multi-family construction also falls into this
category.
In all states, the Federal Fair Housing Act provides protection
against
discrimination for people with physical or mental
disabilities.
Discrimination includes the refusal to make reasonable modifications to
buildings
that aren't accessible to the disabled.
Q: Can condos ban smoking?
A homeowners association's board of directors can restrict
smoking
if it applies to indoor common
spaces such as hallways or recreation rooms.
Outdoor spaces are a
different story, say legal experts.
restriction would probably hinge on local laws
(i.e. if a city banned
smoking outdoors, a homeowners association
probably could restrict smoking
in its outdoor spaces). Typical covenants,
codes and restrictions
(CC&Rs), which govern condo associations,
give the board authority to
make and enforce reasonable rules for the use
of common property. But
that would not apply to interior spaces
owned by smokers
themselves.
Q: Can a condo association ban nudity?
Could you sunbathe in the nude on your own balcony? Not necessarily.
In a
condominium development, a balcony is not considered private property
but
common property assigned to your exclusive use -
but a common area
nonetheless.
Covenants, codes and restrictions (CC&Rs) usually spell out
what activities
can and cannot be conducted on common property. Some
associations
prevent people from barbecuing on their balconies or
hanging large plants
from the railings. However, the larger issue of
regulating personal conduct is
not so clear-cut. It literally depends
on what side of the fence you're on.
If the sunbather can be seen from a
public vantage point -- not by someone
who must climb a tree or peer
through binoculars -- then the rule probably
would be considered
reasonable, say legal experts.
Incidentally, there are places where nudity is tolerated but again,
only
out of public view.
Q: Are condos a good investment?
Condominiums have held their value as an investment despite economic
downturns and problems with some associations. In fact, condos have
appreciated more in the past few years than when they first came on the
scene in the late 1970's and early 1980's, experts say.
While there are
lots of reports about homeowner’s association disputes
and
construction-defect problems, the industry has worked hard to turn
its image
around. Elected volunteers who serve on association boards
are better
trained at handling complex budget and legal issues, for example,
while many boards go to great lengths to avoid the kind of protracted
and expensive litigation that has hurt resale value in the past.
Meanwhile, changing demographics are making condominiums more attractive
investments for single home buyers, empty nesters and first-time
buyers
in expensive markets.
Q: Can I have a dog? (Pets)
Yes, the homeowners association can restrict pets. Some
associations
allow dog ownership under a certain weight and size.
Disclaimer: We are advising you that the FAQ's listed are opinions
only.
Please consult your attorney, and/or accountant for advice and
consultation.
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