Top Five Tips for Purchasing a Condominium in Michigan

While we often conceptualize a condo as connected townhomes, you may be surprised to learn that there is another type of condo designation in Michigan.  The typical understanding of a condo is that of shared walls. This type of condo is defined as a building condo.  Separate from building condos are so-called site condos, which in form and function serve the same purpose as a platted subdivision.  Developers frequently use site condos instead of seeking approval for a subdivision for cost-saving and expediency purposes.  Whether you are buying a traditional free-standing home in a site condo or a unit in a larger building, you should be familiar with certain aspects of condo ownership.  Here are five quick tips for ensuring your condo purchase is successful.

1. Read the Condominium Documents.  Sometimes the best advice is the most obvious advice.  Use and enjoyment of your new condo will be subject to compliance with the condominium documents, which consist of a Master Deed, Condominium Bylaws, Subdivision Plan and Restrictions.  The Master Deed defines the property to be included within the condominium project. It also defines the areas called “common elements” and “limited common elements” that you will share with others. The Condominium Bylaws govern the administration of a condominium project, including potential restrictions on your use of the property.
2. Establish a Sufficient Review Period in the Purchase Agreement.  Information included in the various condominium documents can be voluminous. That is not even considering the documents associated with the condominium association, which separately governs the association of owners within the project.  Consequently, make sure your purchase agreement permits adequate time to review the condominium documents and any association documents. This should include time for a consultation with an attorney to help you understand the documents.
3. Investigate the Association.  Governing the relationship between co-owners and enforcing rules within a condominium project is a condominium association.  Associations are usually incorporated as non-profit entities, subjecting them to holding certain meetings.  If available, ask for minutes of the last association meetings to find out what is really going-on in the development.  Carefully consider issues that are affecting the condominium.
4. Determine the Financial Viability of the Condominium.  As part of your due diligence, investigate the financial viability of the condominium project.  Ask to review the budget and financial statements of the association.  Consider if adequate reserves exist for replacement of common elements, such as road ways and structural items.  Further investigate how dues are assessed, including the amount and frequency of dues.  Ask if there are any upcoming assessments.
5. Inspect the Structures.  For a building condo, inspect not only the unit you wish to purchase, but also the shared common elements, including the roof and other shared systems.  You do not want to be in a position of being faced with an assessment to repair a shared roof or drive for instance.  To that end, be sure to fully understand what you are required to maintain and what the associated is required to maintain. A general building inspector can assist you with structural issues.  Insurance coverage should also be ascertained, including determination of what the association’s insurance covers.

BONUS TIP – Lake Access.  Many condominium projects advertise some sort of lake access or other water rights.  Unfortunately, lake access in the popular conception may not be consistent with riparian rights under Michigan law.  Make sure you consult with an attorney if lake access is advertised so you fully understand what your “lake access” includes.

The above are just some issues to consider, but taking the time to investigate them can save you in the long run.