When you buy into an association, you’re buying its rules and its budget too

Condo, HOA or co-op: know what you’re buying

New Jersey’s Condominium Act (N.J.S.A. 46:8B-1) and the Planned Real Estate Development Full Disclosure Act (N.J.S.A. 45:22A-21) govern many shared-ownership communities. The NJ Department of Community Affairs (DCA) explains the difference. In a condominium, a master deed gives you a percentage interest in the common elements, plus a unit deed to your own unit. In a homeowners’ association, you usually own the land your home sits on, and the association holds title to common facilities. In a cooperative, you hold a proprietary lease and no percentage of the common elements.

A townhome can be any of these. The deed and governing documents tell you which, and that affects what you own, what you maintain and what you insure.

The documents to read before you commit

Ask for the master deed, bylaws, rules, the current budget, the most recent reserve study and recent board meeting minutes. Many buyers also ask the association or its manager for a resale package with current fees, any pending special assessments and any open violations on the unit. The DCA notes you can get the bylaws from the association’s board or from the county clerk’s office where the deed was filed.

Reserves matter. Under P.L.2023, c.214, every planned real estate development association, with limited exceptions, must undertake and fund a capital reserve study. The study must include a proposed 30-year funding plan. Certain condominium and cooperative buildings with concrete, masonry, steel or hybrid load-bearing systems must also get structural inspections. Read the reserve study next to the budget and minutes to see whether big repairs are planned and how they will be paid for. If reserves look thin, ask how the board has handled past special assessments.

Insurance: the master policy and your HO-6

The association’s master policy and your own unit-owner policy, often called an HO-6, work together. The NJ Department of Banking and Insurance summary says a condominium policy covers property permanently installed in your unit that is not covered by the association’s policy. It also covers personal property, loss of use and personal liability. Loss assessment coverage, which can help with certain assessments charged to owners, is an optional coverage some companies offer.

Before you buy, ask what the master policy covers inside the unit, and what its deductible is. Then share that with your insurance agent so your own policy fills the gaps. Standard condo policies do not cover flood, so check flood risk separately.

Financing a condo

If you plan to use an FHA loan, check HUD’s FHA condominium lookup. You can search by state, county, condo name and approval status, which can be approved, expired, rejected or withdrawn. Ask your lender early how the condo project’s status and documents affect your loan.

If you’d like a referral, Cathy works with Bradley Brondt, Branch Manager (NMLS 242550), The Brondt Cook Group at Acre Mortgage and Financial, Inc., in Cherry Hill. You’re free to choose your own lender.

How Cathy helps with condos and townhomes

Cathy Walters has been a licensed New Jersey real estate professional since 2007 and has lived in Cherry Hill and Mount Laurel. She often points out that association fees, maintenance responsibilities and amenities create very different ownership experiences from one community to the next. Her role is to help you compare them side by side, read the documents with you, and bring in real estate attorneys, inspectors and insurance professionals from her network. Here’s what that means for you: you know what the association handles, and what is yours to handle.

Before you buy a condo or townhome: what to check

• Confirm whether the home is a condominium, HOA or cooperative.
• Read the master deed, bylaws and rules, including pet, rental and parking rules.
• Review the budget, reserve study and recent board minutes.
• Ask about current fees, any pending special assessments and what the fee covers.
• Find out what the master policy covers inside the unit and its deductible.
• If using FHA financing, check the project in HUD’s condo lookup.
• Have a New Jersey real estate attorney review the documents during attorney review.