Condo Complications: Some Issues With Condo Ownership


Condo Ownership is the perfect lifestyle for some, but not for others. If you’re thinking of buying a condominium, you must do your due diligence regarding the Condo CCR’s (Covenants, Conditions and Restrictions). Also important is the financial stability of the Condominium (Budget and amount in Reserve Account).

“Condominium” is a form of ownership, not a physical description. In Georgia, stacked flats, mid-rises and high-rises are almost always condominiums. However, town homes can be fee simple ownership or condominium ownership. In condominium ownership, the unit owner owns everything from the sheetrock in as well as from the floors up to the ceiling. The outer walls and roofs are commonly owned by and maintained by the HOA. The land is also commonly owned and maintained by the HOA. There have been cases where a contract is written up as fee simple, and at the last minute the closing attorney’s title report shows it as a condo, and the entire loan has to be redone, causing a long delay in the closing. 


Suzie Homeowner is thrilled that she has found a lovely condominium that is in her price range in a wonderful location. She has her agent submit an offer with a prequalification from her lender stating that she qualifies with an FHA loan for that price range. The offer is accepted, but a few days later Suzie finds out that the monthly HOA fee is $300 per month, and this amount will be added to her monthly payment in the qualification process, just as the property taxes are. After sweating it out, Suzie’s Loan Officer tells her she still qualifies.

Suzie loves plants and flowers and plans on filling her patio and front stoop with as many pots as possible and planting seasonal coloring in her front yard. Her fiancée will be filling up his pickup truck (he works for a landscape company) and bringing the flowers from Home Depot shortly after she closes. She will be working from home, so the den will be perfect for her office. This is a pet-friendly condo, so her little dog will be moving with her, and her fiancée’s two Rotweillers will be visiting frequently. 

A week before closing, the Loan Officer discovers while doing the mandatory HOA check that the monthly HOA fee delinquency is at 14.8%, so they just squeaked by, as lenders will NOT close if this delinquency exceeds 15%. This is a recently passed strict lender requirement that is causing contracts not to close.  Also, a condo complex must be FHA approved in order to close with an FHA loan, and fortunately this condo complex was FHA approved. FHA no longer does spot closings. 

Two days before closing, Suzie finally gets her hand on the CCR’s and condo documents, and fortunately the Budget and Reserve Fund are healthy. She is relieved to see that they will allow her to work from home, as long as this does not increase traffic and/or vehicle count. There is a limit of two decorative items/plants on the front stoop, and individual homeowners are not allowed to plant anything in their yard. No vehicles with business branding are allowed, but luckily the sign on her fiancée’s truck is magnetized and can be removed when he comes to visit, but he will not be able to park his boat on the property. There is a limit of two pets per unit, and no dogs over 30 pounds are allowed. No way to shrink those Rotweillers down that much! Oh well, when they get married she can just rent out her unit, and they can move somewhere else. Oops, no they can’t – no rentals are allowed at this condominium!

Suzie weighs the pros and cons and decides she wants to go through with the closing (after all, she will lose her $2,000 earnest money if she does not close, as at this point she is no longer protected by the Due Diligence clause which expired two weeks ago). She is told by her insurance company that the condo has a master hazard insurance policy (cost is included in the monthly HOA fee), so she will only have to obtain a “condo” policy, which covers the inside including her flooring, appliances, etc.

After she moves in, Suzie discovers that her next door neighbor parties at night on a regular basis, but fortunately the Condo rules designate “quiet time”, so they must cease during those designated hours. However, the neighbor’s barking dog apparently hasn’t been told about the quiet time! After getting no results by mentioning this to the homeowner, Suzie will have to report this issue to the Board or Management to get it resolved.

To sum it up…

Condo rules are made and enforced in order to protect the appearance and the value of the complex as a whole. Potential condo buyers should thoroughly check out all aspects of the condominium they are considering, assuring that it fits their individual lifestyle. This must be done early on, while they are still under a Due Diligence period. What is positive and totally acceptable for one person may be totally unacceptable to another!

Special thanks to Carolyn Nicholes for her help in putting this together!

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10 Responses to “Condo Complications: Some Issues With Condo Ownership”

  1. John Rausch Says:

    Good information Carolyn! This year in particular, it seems that many of those issues are popping up.

  2. Bobbie Conner Says:

    Great information. Thanks so much for these informative articles.

  3. Michelle Foster Says:

    Great info Carolyn! Thank you for clarifying that a townhome can be either fee simple or a condo…so many agents don’t know this and it is often an issue I face when taking my buyers out that don’t want fee simple ownership.

  4. Arthur Harris Says:

    Great information Carolyn! Investors should make sure to read the Covenants before to make sure that rentals are allowed.

  5. Suzie perlstein Says:

    As a Condo complex resident and long time “rebel” I loved this!!!

    It is so true, and the list of what the do’s and don’ts are is huge! My listing in my own complex is going to closing this week, and I am already knee deep with the buyer on her intentions and the need for her to get permission…
    Our town home is listed as “fee simple” on the incorporation docs, but we are consititued as and considered a condo….go figure….and we are NOT FHA approved, so yes, it is vital to completely understand that. The best way to get the information is to call the management company. Get them to respond to you in writing, so you have that in your pocket. Condo living is not for everyone, the HOA’s can be very bossy, but the other side of the coin is knowing that your investment is safe in a well maintained development and you can depend on that. We do allow rentals, but in a neighborhood of 41 condos we only allow 3 at any one time….that is to preserve the value and the ability to get Conventional loans for buyers….every development is different, so it is important to contact the management company before showing just to have the answers to any questions the buyer may have…

  6. Gerard Dickson, Loan Officer Says:

    Wow! This is such an important topic and you did an excellent job highlighting the difficulties with condo living as well as obtaining financing for a condo. There’s one thing I would suggest Realtors do during the due diligence period or during the offer period, obtain the “Condo Questionnaire” from their loan officer. This is typically a one or two page form that needs to be filled out by the HOA representative. Once this form is completed get it back to the loan officer immediately for review by the lender to see if it meets their specific investor guidelines. As you mentioned, each investor allows a specific number of rentals. Additionally, the master HOA policy denotes if it covers the inside of the unit. If it does not the buyer will have to obtain a HO-6 “Walls In” Policy. A quote can be obtained from any insurer, such as Metro Brokers Insurance. This is a very helpful article and will save Realtors a ton of time and have successful closings.

  7. Glen Curry Says:

    Great article. The insurance is toally different regarding Condos and Townhomes as well. Most property managers for condo associations have no idea who is responsible for what when it comes to an insurance claim. As such, they can give erroneous direction to unit owners on what the coverage amounts should be. The assumtion is, since the unit owner owns inside the four walls, they are responsible for insuring it. Here in Georgia, they are responsible for maintaining inside the four walls. However, the insurance section of the by-laws sets forth who is responsible for insuring. I will clarify in a future blog.

  8. Sandi Rodrick Says:

    All good stuff to know. Unless the HOA is run by paid management company [and even that is not a given], it’s members are comprised of the homeowners. I live in a condo community run by such a HOA and was asked to fill a past president’s term. I’ve been president longer than Bush! I’ve learned that the all condo unit owners want everything but few are willing to do the work to make it happen. From pools to pets, from roofs to renters, there’s something all the time. Having to take an unfavorable stand has been “scary” at times and even invloved the law. Thanks to a dedicated few at our older complex, the bills are paid, the grounds are kept and we’re surviving, which I’m finding out in this day and time is not always the case. Just because a HOA has been the sheriff in town since the complex came out of the ground, doesn’t mean that a few villians don’t need to be run out of town on a rail. Make sure the HOA books are current and your interests are being taken care of just as the by-laws, covenants, etc. state in recorded written word.

  9. Tom & Kelly Beechler Says:

    The north Georgia Mountains offer limited Condos, but in Big Canoe, where community lifestyle is centered around the views and amenities, we do have several condos availible (and for sale *hint.hint*), so we appreciate this tid bit of information. Loving it at BHGRE Metro Brokers.

  10. Allyce K. Arnold Says:

    Great artice! A while ago, I did a spot FHA approval and it worked out. I just closed on a Condo that was dificult due to the changes but Audrey Armstrong with Metro Financial and her processsor (Tammi) did a great job and got it closed. My buyer is very happy to be in her new home. Keep the info coming!

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