Buying a condo? Read your rulebook

When you buy into a condo, you buy into a democracy.

Within their individual units, condo owners are free to knock down walls, redo the kitchen or paint a bedroom mural.

But in the common areas outside the unit, such freedoms give way to the collective will of the condo association.

Governed by an elected board, the association is bound by restrictions on everything from curtains and noise levels to what you wear and satellite dishes.

Like any community where the majority rules, condominium life is no utopia.

“The risk factors are the loss of independence,” says Michael H. Mannes, a Baltimore real estate attorney who represents 75 condo associations. “You can’t do everything you want to. It’s also a benefit. Realtors will tell you that covenanted communities have better resales because things are kept up.”

Maryland condo law resembles that of most states. Condos are bought and sold like houses, but a deed entitles owners solely to the airspace within a unit’s walls, floor and ceiling. Condo courtyards, corridors, recreation rooms and other common spaces are owned collectively. (Co-op ownership is even more limited. Buyers purchase shares in the corporation that includes a lease to use a specific unit.)

Condo owners pay a mortgage, plus a monthly assessment fee determined by the association board to cover maintenance, repairs and replacements to community property.

Special assessments on top of the monthly fee can catch owners by unpleasant surprise if they don’t do their homework before buying a condo. “Read the operating budget to determine that the association is adequately reserving for repairs and maintenance and replacements,” Mannes urges.

In a mid-rise condo building, for example, “You should be looking for a reserve in the range of between 5 and 10 percent of the total budget for replacement of capital items such as a roof,” he says.

When considering a condo purchase, don’t assume that an individual unit is covered by a master insurance policy. The Maryland Court of Appeals ruled in April that condo associations aren’t required to protect individual units from interior damage resulting from an outside cause, such as a water leak.

Even if a condo association does carry “single-entity coverage,” owners are wise to buy an HO-6 supplemental policy, Mannes says.

State law entitles new owners to a “resale disclosure certificate.” Issued by the condo association, the certificate includes information on insurance coverage as well as the operating budget, reserves, assessments, pending litigation and building code violations.

Potential condo dwellers should weigh the risks of living alongside others under an exhaustive set of rules that may seem oppressive or silly. Mannes has intervened in matters as petty as the placement of a doormat that have morphed into long, nasty battles.

Nor is condo life for those who enjoy public unconformity. Residents who want to install a swing set or hang a lantern by their door have little recourse if such additions are prohibited by the association. Condo documents are drafted “so that waivers are difficult,” Mannes says.

The Maryland Condominium Act provides a “dispute settlement mechanism” for violations and conflicts. “Few cases should be in court or in actual arbitration,” Mannes says.

State law also addresses accusations of bias. “If there were truly a case that could be made for some sort of discrimination, then the Maryland Human Relations Commission is the first step in a fair-housing action,” Mannes says.

True condo democracy thrives on participation in a condo association. “The board can come down with a very heavy pronouncement and if nobody speaks up, that pronouncement becomes law,” Mannes says. “You have to advocate for yourself.” {EXA}

Stephanie Shapiro is a freelance writer based in Baltimore.