Many people, rather than buying a house, are choosing to purchase a condominium unit. Some buy condos to live in them and some use them as an investment, renting them out.
The most common reason for buying a condo unit is the lack of maintenance. A condo owner “owns” his unit (usually defined as from the unit’s wall, in) and has a share in the common areas of the building (stairways, common mechanicals, roof, grounds). The owner pays monthly assessments to the the condominium association which, in turn, pays for the maintenance of these common areas.
Therein lies a common problem.
Developers of new condominiums, usually, draw up the condominium association rules (also known as the Condo Docs) and forms the legal entity of the Condominium Association. At some point of occupancy, usually when 60 to 70% of the units are sold, the developer passes legal possession of the building’s common areas over the association. The developer may have already hired a condominium management company to handle all the administrative matters and this company (usually good “friends” with the developer) will accept this legal transfer on behalf of the association.
So, the association now “owns” and has legal responsibility for the building, as a whole.
But do the unit owners know the condition of the building’s common areas? Are they sure that the building does not have construction defects (leaky roof, badly constructed drainage systems, building code violations, water problems, etc). If the building has problems and the developer has transferred ownership to the association, the condo members now have all the liability.
No, this is not fair, but it is quite legal and commonly done. We have done many inspections of condominium common areas and found gross defects and building code violations. Remember, In Illinois, it is NOT the responsibility of the local Building Code Departments to make sure the building is “up-to-code”, it is the builder’s, and now, the owner’s responsibility and the “owner” is the condominium association! Once the developer has handed over the building, the new owners have all the liability to make any required repairs. Also, please remember that just because a building has “passed” a code inspection, this does not mean that the building is free of construction defects. Building codes are bare minimum standards and do not determine the quality of the construction.
Condominium associations should have a complete inspection of the building’s common areas done by a licensed and certified home inspector, one who has experience with the common defects found in new construction, before accepting possession of the building’s common areas. All reputable condominium association lawyers recommend that a transition inspection be done before any transfer of ownership occurs. By doing so, the condo board is properly executing their due legal diligence and protecting themselves, as well as the other condominium owners. Remember, condominium board members have a legal, fiduciary responsibility to the association.
Please, take a moment to review our sample reports and see for yourself what a transition inspection can find and how you can avoid the costly mistakes of finding defects after transfer has occured.