4 basic and important terms you should know and check when you buy condos.
1. HOA (Homeowner Association) fees: expense for the common area and building maintenance and management service charges such as having 24 hour doorman or onsite building managers. Therefore, the more amenities the building offers, the higher HOA fees tend to be.
2. Reserve fund: the amount of funds the building sets aside by building HOA board for unforeseen circumstances of future repairs and replacements in the building.
3. Special assessment: fee that homeowners are required to pay in addition to monthly HOA fees for the major or unexpected repairs for the building that the reserve funds aren't enough to cover. For example, window changes, hallway, lobby or gym renovations. To save you from surprises, you should always ask for how much the reserve fund the building has is, and if there is any special assessment coming up.
4. Rental cap (owner occupancy rates): if you plan to rent out your condo unit after purchase, you should check the rental cap rates. It is set by HOA board to limit to the number of renters in a condo. If the condo rental cap has been met, the owner will have to wait until the number is available.