Condominium Purchase Tips from a Lawyer in the Trenches

Thinking of buying a house or new condo in this market? You can snag for yourself some excellent "deals" if you are looking in Chicago or other metropolitan markets. What you may end with however, is a bad investment if you are not careful. I offer some tips and tricks to maximize your investment by doing some homework on the front end. I have seen countless examples of problems, when people think that their attorneys have it all handled. Trust, that no one attorney (even someone who does a lot of closings) has seen it all. As the buyer, you must do your own homework!

Here are some things to be on the lookout for:

- Does your seller actually own the property? Many times you can check the online records at the recorder's office to be sure the seller who has contracted with you is the owner.

- Are there any construction issues?

If this is new construction or a "rehab" condominium unit, you should check out the following:

-Is your developer licensed in your city?
-Did the developer get proper permits?
-Is your property zoned correctly for the number of entrances, exits and parking spaces?
-Did someone add a rooftop or garage deck? If so, was that project permitted?
-Are there any outstanding code violations?
-Is there a Certificate of Occupancy?
-Any building court suits outstanding?
-Any Mechanic's Liens for unpaid contractors or material suppliers?
-Any litigation relative to the builder, contractor, seller, realtor or condo association?
-What kind of loan did your developer have to build out or improve the property? It makes a difference if they got a regular mortgage/commercial loan or if they got a construction loan!
-Does your developer have other projects? Are they being completed and are other buyers satisfied?
-Is there any online information about your developer and their principals? A quick "Google.com" or "www.yelp.com" review could mean the world to you if they have bad reviews!
-Are you the first purchaser? Sometimes it's better to wait - as you may not have a frame of reference as to how the developer is treating others. It may be better to be the last buyer than the first in a condo building. NO incentive is good if your developer skips town!
-IS your association properly funded for contingencies? Has the developer paid its proportionate share into the association account?
-When is your inspection? If it's the day before closing in the contract, you should modify the contract to allow your inspector access to the property WAY before closing. If you wait until the day before closing, your mind will not be clear and you will assume the developer will take care of all issues during the "punch list" period. This is a deadly mistake in many instances. Do your inspection within 5-10 days of signing your contract. That way your time and money are not tied up.
-If your inspection reveals problems, be sure to include all of them, including common area issues, in your punch list which the developer/seller must sign at closing. If they are unwilling to sign it, you may not want to close. A developer who refuses to sign such a list and acknowledge the problems may be bad news!
-If your inspection reveals problems, you should consider also a "holdback agreement" whereby the title company or one of the attorneys holds money due the developer pending the developer's completion of the work. They may need some financial incentive to work, and this can help!

While this list is by no means exhaustive, you can save yourself the pain and expense and time lost in a bad investment by watching the signs, being informed and strong. Very few courts would "make" you close on a bad deal. Just because the numbers are right, does NOT mean that the "bricks" are worth buying.

So what can you do? Sometimes it makes sense to slow down! You can look at the available information and remember your attorney is there to help you. For additional information, or to request a "condo-school" presentation, just contact me at: alisalevin@yahoo.com, or call me at (312) 720-0082.