Often condominium and loft buyers are encouraged not to worry about common element repair budgets in their search for that dream home downtown. Most people in the market, even new home inspectors, are somehow convinced that the elevators, roof, brickwork, boilers and parking garage are going to be maintenance- and trouble-free during their tenure in a particular building.
Nothing could be further from the truth. These and other areas are called the “common elements” in a multi-unit building because residents own them in common. Unfortunately, this also means that homeowners share responsibility for any problems in these areas. Our inspectors routinely find that 60 percent or more of all problems discovered during condo inspections involve these elements.
The reality is that if forced to choose, you might be better off skipping the inspection of the condo unit itself and getting a good look at these common elements.
What are some of the typical problems?
To find out, take your home inspector and a set of binoculars, and start by examining the exterior skin of the building. Loose mortar at the brick joints, sections as small as a square inch or so of “popped” concrete are clear, definable signs of trouble.
The Chicago area suffers from a severe “freeze-thaw” cycle throughout the winter. Temperatures fluctuate between freezing and 40 degrees or more, sometimes more than once in the same day. The sun shining on a masonry wall can raise the temperature of that wall above freezing even when the outside temperature is below zero. These extreme temperature shifts stress masonry and eventually lead to its decay (witness the number of older buildings in Chicago’s Loop that lost tiling last winter). In response to this risk to personal safety, the city has developed façade inspection ordinances.
Another good source of information about the state of an older condominium’s infrastructure is the condominium board meeting minutes. But these minutes may or may not have information regarding all needed repairs. In addition to board minutes, Illinois recommends condo boards do a capital reserve study as part of each association’s due diligence. Don’t be embarrassed to ask for this. Simply tell your real estate agent or the seller that you want the board meeting minutes for the past three years and a copy of the capital reserve study that was used for setting the budget for repairs. Or, better yet, request them in writing through your attorney.
The capital reserve study is an attempt by a professional property inspector, architect or engineer to assess common area elements and establish a budget for the needed repairs over a typical 10-year period. These studies are usually revisited every five years. Ask yourself if you can afford your share of the proposed repairs.
In your investigation, you may find that the condo board president or a select committee has been sanctioned to investigate problems. These ad hoc committees then report back directly, sometimes secretly, to the board representative. The results may not be published. If you suspect based on your inspection that there are problems not being dealt with in the minutes, write or speak to the president to ascertain if there are any ad hoc committee investigations or reports. If so, acquire copies and review them.
Over and over I’ve seen the strength of the buyer’s position increase by simply making reasonable requests for information. When you get such information, read it. This shouldn’t take long. These three pieces of information are not part of the disclosure package your agent gives you during the purchase process. You’ll be asking for much more.
What if, in reading the minutes, you find there were rodent issues, environmental issues, developer lawsuits or Chicago City Code violations? Find out if they’ve been resolved. Don’t allow these documents to be delivered to you after your inspection and attorney review period. At that point you can do nothing. Dig in and demand answers to your questions by a specific date. Or get an extension of the contract review period so that your attorney can act on what you have discovered. Attorneys typically don’t feel they are being paid to review the board minutes or the capital reserve study. You will have to do that footwork yourself, but your attorney will help you act on the findings.
As professional licensed home inspectors, most of us know that the real problem in condo and loft living is in the common areas, but our hands get tied. We hear seller’s representatives say, “Why would you ever want to see the roof? I’ve never heard of an inspector looking at a highrise roof.” Since many inspectors get their work from real estate agents, they tend to back down. When sellers’ representatives get defensive, that’s your signal to turn over the rock. Something that threatens your pocket book may be hiding under it.
Thomas Corbett is president of Tomacor, Inc. a professional property consulting company specializing in commercial and residential property inspections and expert witness work.