As you have been searching online for Ocean City real estate you have probably noticed the condominium fees that are noted on each listing. A majority of the Ocean City condos for sale have monthly condominium fees associated with them and there tends to be a lot of confusion surrounding them. This article will explain what they are and outline what they cover.
Condominium fees cover the operation, general maintenance and up-keep of the particular building the property is a part of. Basic condo fees cover building insurance, common area maintenance, professional property management, amenity usage and maintenance, reserve fund build-up, trash pick-up and water usage. A budget is determined for the building and then divided amongst the units that make up the condominium project. The amounts paid are based on the size of the particular property relative to the other units in the building. A three bedroom condo will usually have a higher condo fee than a one bedroom unit in the same building. This is largely because the three bedroom unit will warrant higher property and flood insurance costs, which are covered in the condo fee. All Ocean City condo buildings set up their own structure as to how they operate, however there are some common similarities that I have outlined below.
A large portion of the annual condo fee covers your homeowners and flood insurance policies. There are master insurance policies in place that cover the building, condo units and common elements. The only insurance you are typically responsible for obtaining is content insurance (HO6 policy), which covers the interior of the unit, your furnishings and personal belongings. In the event there was an issue the master insurance policies through the condo association would rebuild the building and your HO6 policy would replace everything inside your condo.
Professional Property Management
A majority of the condominium associations in Ocean City hire a professional property management company to take care of the day to day affairs of the building. They will handle the accounting, bill paying, preparation of resale documents, property inquiries, scheduling of maintenance, coordination of condo association meetings, etc. Property management companies are experienced in these matters and make for a well run and proactive association. Some smaller buildings choose to self manage themselves and save on the property management costs.
Reserve Fund Build Up
A portion of the condo fee goes into reserve accounts for future maintenance projects, repairs and any unforeseen items that may arise. You want to find a building that has strong reserve accounts as it helps to alleviate the possibility of future special assessments and ensures the building remains in good condition, both of which ultimately preserve your Ocean City real estate investment. Mortgage companies will not lend on buildings that do not have adequate reserves or those that do not have funds allocated in the budget to build them up. As a general rule, lenders want to see 10% of the condo associations overall budget being allocated to the reserve accounts.
Common Area Maintenance
A portion of the condo fee goes toward the maintenance and up-keep of the buildings common areas. This will include landscaping, roof, walkways, fire suppression systems, railings, siding, etc. You are responsible for the mechanicals and interior of your unit, the condo association will take care of the rest.
Amenity maintenance will cover usage, repairs and replacement of pools, elevators, fitness centers, boat docks, bulk heading, tennis courts, etc. The more amenities a building has the higher the condo fees are going to be.
These are the similarities that we see across a majority of the condo buildings in town. Once you make an offer that is accepted to purchase a condo in Ocean City you will have a seven day review period per the Maryland Condominium Disclosure. This disclosure requires that the Seller provide a resale package from the condominium association to the Buyer within fifteen days of settlement. This resale package will included copies of the bylaws, building rules and regulations, master insurance information, budgets, minutes from the most recent association meetings, a resale certificate, reserve/maintenance studies and other applicable items. This allows you to review the building and condo association that you are buying in to ensure everything is in good order. Once you receive this resale package you have 7 days to review the information. During this period we can get answers to any questions about the building or association that you may have. Should there be something that is not acceptable to you and we can not get it resolved, you can then be released from the contract within this 7 day window. Your deposit will be returned and you can move on to pursue another property.
You don’t want a condo fee that is too high as the result of previous poor management. You also don’t want one that is too low that will lead to possible special assessments and a deteriorating building. As an experienced Ocean City Realtor I will assist you in reviewing the condo disclosures to ensure you are buying into a well run building that will provide the best investment.
If you want to discuss this in greater detail or have any other questions feel free to contact me anytime at 443-614-9179.