PDF Print E-mail

Myrtle Beach Condos


What Everyone Should Know About Condominiums

How do you choose between condos and single-family homes?

When you factor in appreciation over the last five years, condominiums can be a more profitable investment than a single family home. Some Myrtle Beach condos have appreciated even more than single family homes.

Singles, empty nesters and first time buyers are finding condos to be more attractive investments than single family homes, because of changing demographics. Many homeowners associations have well trained volunteers to help with, and advise on legal issues. Board members help prevent problems that would affect resale values or construction inadequacies.

Are condos a good investment?

When considering Myrtle Beach property you should understand condos play a very important role in the market. The condominium community has learned from previous problems that have been brought on by lawsuits and other disputes. They have worked hard to change their image and performance. Associations are working to prevent legal problems and to better manage the properties.

Owning a condominium can be an excellent investment and offer many rewards. Be sure to do your homework and considers the issues mentioned below.

Tenants-in-Common Ownership (Owning Collectively)

You should be aware that you are buying property in common with other owners, as well as a section of that property. You will only own the unit in which you live. The rest of the property is owned along with other owners. This includes any recreational facilities, or any other buildings.

The portion that you own as well as any common areas will be clearly listed on you purchase agreement. You will be assessed fees for maintenance, taxes and general operation of common areas. You will also have a vote in you home owners association.

When you own real estate in common with others requires there are legal documents to govern your interests and the interests of the other owners. The three major documents are defined here:

Master Deed: The master deed describes the entire condo complex including each unit and all common areas. It specifies fundamentals of ownership that govern how the condo will be operated. You should have your attorney review this document to make sure it complies with state regulations. The master deed should include provisions for professional management if possible.

ByLaws: The bylaws, which govern the day to day rules of the condominium, will typically state how and when the developer will turn over control to the association. The bylaws will list responsibilities of the board officers, terms and method of election, use of common areas, how fees and assessments will be collected and establishing an operating budget.

Budget: This document determines the monthly association fees. It should list all the necessary expenses to maintain all common areas for one year. You should ask about funds held for replacement or repair of common areas of the complex.

Remember that lending institutions will require proof of a master insurance policy. You should review all of these documents before signing a purchase agreement.

The Pros and Cons of Condos

Condominiums and townhouses may be more affordable than single family homes. Here are some other things you should consider before deciding to buy a condo:

  • Maintenance: Many condos have maintenance crews to care for common areas, do repairs in your unit, and let in workers when you’re not home.
  • Outdoor Space: You may not have any space for a flower garden but if you hate yard work it should work out great for you.
  • Security: Many condos have extra security such as, keyed entries, gated entrances, or perhaps door attendants. You will also be closer to other people in case of an emergency.
  • Amenities: Many condo properties have swimming pools, fitness centers, tennis courts, and other facilities on site and you would have to join private facilities if you owned a single family home.
  • Storage: You will have less storage space. Most condos do not have attics or basements.
  • Reserve Funds and Association Fees: Fees for amenities and savings for repairs and upkeep will still have to be paid whether or not you’re interested in the amenity or not. For example, even if you never use the pool you will still have a portion of your fees go to maintain the pool.
  • Resale: The resale of your home may be affected by other unites in the complex. If several units have the same basic amenities, the one with the lowest price will most likely sell first. Single family homes generally are more individualized.
  • Freedom: Some condos prevent things like pets and home based businesses. Make sure you know the limitations that are place on your units. Be sure to read and understand the covenants, restrictions and bylaws.
  • Proximity: You will be very near your neighbors, try to meet them and make sure their lifestyle will not interfere with yours.

Home or Property Owners Association POA/HOA

A poorly managed homeowners association can have an adverse affect on property values. The association’s financial, political and legal standing influence the values. Meet with the association manager and discuss the covenants, codes, fees and restrictions (CC&R’s). Also ask if inspections have revealed problems in construction. Ask about and understand all rules for home owners. Make sure you can live with these rules, don’t think you can change or ignore rules you do not like.

Review the budget and talk to the treasurer. Ask about any expected increase in due or assessments.

Associations are volunteer organizations staffed by neighbors so politics can be involved. If possible speak to other neighbors and get their views of how well the association is being run. Like all investments, the more you know the better off you are.

Questions You Should Ask the Condo Board

Before you buy, contact the condo board with the following questions. In the process, you’ll learn how responsive—and organized—its members are:

  1. Can you tell me what the percentage owner occupied units and the percentage is rented out? Owners take better care of their property that rents do. So more owners will make the condo more attractive to potential buyers when you resale.
  2. What are the covenants, bylaws (sometimes called a declaration of trust), and the rules, restrictions and regulations for the condo? Make sure to get a copy.
  3. Are there any Grandfather Clauses that would affect my unit?
  4. How much money does the association keep in savings (Capital Reserve Funds), and what type of account is it kept in? It is very important to know if there's enough to pay for major improvements
  5. Ask for a copy of the budget and financial statements, Look at the income and expense statement and balance sheet which show the assets and liabilities and have your account review it.
  6. Are association assessments keeping pace with the annual rate of inflation?
  7. What exactly do the assessments cover?
  8. Have any special assessments been required in the last five years and if so how much was assessed to each unit?
  9. What is the turnover rate for the complex?
  10. Is the condo complex currently involved in any litigation?
  11. Is the developer involved in any other projects that I can visit?
  12. Ask neighbors about the board, quality of construction, and about the community in general.
  13. Are multiple associations involved in the property and if so will there be any separate fees?
  14. Ask for a recorded copy of the master deed.
  15. Ask for a copy of the deed for your unit and the floor plan.
  16. Ask for a copy of recent newsletters and minutes from the board meetings. Check for any items they’re discussing for the future that may affect you.
  17. Ask for rental history if you plan on renting the unit either short (weekly) or long term rental (6months or 1 year minimum).
  18. Consider on-site rental company or off Property Company? What are the rental splits?
  19. Do you need 24 hour front desk services? What about the advertising budget to get my unit rented?
  20. Does the POA cover the wind and rain insurance on the exterior of the building or does this need purchased separately
  21. Any Current, pending or planed assessments that will effect the buyer
  22. Will you need a management company?
  23. If you are purchasing on the ocean or Intracoastal Waterway, you need to be familiar with the Coastal Management Act
    S.C. DHEC Office of Ocean and Coastal Resource Management
    http://www.scdhec.net/environment/ocrm/

Can a Condominium Association ban Nudity?

Legal experts say an association can ban nudity in all common areas or areas that are visible from a public vantage point. This can include the individual unit’s balcony if it is visible to the public. Remember public nudity is already illegal in the state of South Carolina.

Can a Condominium Association ban smoking?

Homeowners associations can ban smoking in common spaces such as hallways and recreation rooms and other indoor areas. The interior spaces that are individually owned cannot be restricted. Out door smoking regulations would depend on state, city and/or county laws.

Do condos have to be made accessible to the disabled?

The 1990 Americans with Disabilities Act does not require strictly residential apartments and single-family homes to be made accessible. But all new construction of public accommodations or commercial projects (such as a government building or a shopping mall) must be accessible. New multi-family construction also falls into this category.

In all states, the Federal Fair Housing Act provides protection against discrimination for people with physical or mental disabilities. Discrimination includes the refusal to make reasonable modifications to buildings that aren't accessible to the disabled.

To find out more about how the IRS views condo association fees, look online to IRS Publication 17, "Your Federal Income Tax," which includes a section on condos. Or order a copy by calling (800) TAX-FORM.

As with any home purchase, you should do your homework about the neighborhood or development before you buy. In the case of condominiums, it is important to read the past six months of homeowners association minutes to see how effective the board is and to learn about any possibly detracting issues (such as protracted litigation with the developer).