Purchasing a condo or townhome: A townhome, pud (planned urban development), or condo are all basically the same because of ownership of the inside portion of the unit only, unlike a single family residence where you own the land, too. There is also a homeowner’s association fee (HOA) that is paid monthly – or semi-annually – yearly. You want to know how much that fee is and just what it covers regarding water, insurance, pool, ground maintenance, parking, roof replacement, reserve amount, etc. Make sure you carefully read the CC&R’s (all of the complex rules and regulations). In the area I cover, Southern California, I try to make sure that there is earthquake coverage built into the HOA fee. If an earthquake occurs and your complex becomes uninhabitable, you have just lost all of the money you put down for that unit and you might still be liable for the mortgage balance (always check with your mortgage provider), plus you have lost your place to live. Many newly constructed condos/townhomes claim that they were built to present earthquake standards, but I remember the 1994 Northridge earthquake and the steel girders bent in half at the Northridge Mall. Hopefully, you are, or will be, working with a knowledgeable realtor who will help you with your due diligence.
Always add that HOA fee amount into the amount of your monthly mortgage payment so you know just how much it will cost you each month. Each amount will be paid separately, one to your mortgage provider and one to the HOA, but you should know the sum each month.
Since we live in earthquake territory, it is wise to obtain earthquake insurance if you can afford it. However, if you are thinking of purchasing a condo or townhome, it is definitely a must.
Many builders and realtors will say that a newer building was built to present day earthquake standards, and that earthquake insurance is not necessary. Earthquake insurance is certainly not mandatory, but I remember the Northridge Mall after the 1994 earthquake and saw the steel girders bent in half. The force it took to do such an act of bending steel girders or leveling apartments/condos is something none of us know or can predict. We never know where the next earthquake will hit and how strong it will be.
If you purchase a condo/townhouse, please make sure it has earthquake insurance in the HOA dues. If not, whatever money you put down will be lost forever and you still probably have a mortgage to pay…unless otherwise stated in your loan documents. Plus, you won’t have a place to live.
If the entire complex does not have earthquake insurance, you CANNOT buy earthquake insurance for your condo/townhome. You can have separate homeowner’s insurance to cover the contents inside your unit, but that’s it.
I had a client who paid $1,000,000 for a penthouse in West Los Angeles. Fortunately, the HOA had earthquake insurance or she would run the risk of losing $1,000,000. What a terrible chance to take!!!
Your realtor can always find out if there is earthquake insurance or not by making a call to the listing agent, the homeowner’s association or to the management company if there is one. Quite a simple solution to avoid a costly mistake I would say!!!
This current market can be VERY challenging for homeowners. Many are struggling to get a gauge on their best options. With my guidance, you can make the right decisions immediately and avoid making huge mistakes concerning your biggest and most important asset. I'm here to show you how to eliminate uncertainty, focus on what you need NOW and win.