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Avoiding the Pitfalls of Shared Ownership:
What You Need to Know Before You Buy

By Ryan Poliakoff and Gary Poliakoff

In addition to depressing home prices, the current housing crisis has put a tremendous strain on the sixty million Americans who live in Shared Ownership Communities (Condominiums, Co-Ops or HOAs).  While SOCs can provide homeowners with a better quality of life than a traditional neighborhood, that lifestyle comes at a price--because in an SOC, while you may own your home, you also own community property together with dozens, or sometimes hundreds, of strangers, all of who are jointly responsible for maintaining the common property.  If an owner fails to pay their share, the other owners are forced to pick up the slack.  The bottoming out of the housing market has created prime conditions for bargain-hunters, but there are a few key things that any homebuyer needs to know before safely buying a home in an SOC:

Maintenance Payments are not Rent, and They are Not Optional: Because every community association is tasked with maintaining and operating the common areas of the property, they must collect assessments, or maintenance, from every single owner.  These payments may seem like rent or mortgage bills, but they’re different. Unlike a mortgage, maintenance is not a fixed, guaranteed amount--it will vary depending on the cost of operations, the existence of emergency repairs and the amount of reserve funds held by the community.  And you are absolutely required to pay your maintenance, by law, every single month.  If you don’t, the association can put a lien on your property and foreclose.  It doesn’t matter if the board of directors is mismanaging the property, or failing to maintain the common areas.  Before you buy a unit in any SOC, make sure that you check not only the current maintenance amounts, but also how much money the association keeps in reserve for emergencies, and whether there are any outstanding large repair projects that might require a special assessment. And always budget for fluctuations in maintenance, especially in new properties.  It’s not uncommon for a new neighborhood, recently turned over by the developer, to raise maintenance significantly in order to cover costs that were underestimated in the original budgets.

You are Responsible for the Good Times, and the Bad Times: Life has its ups and downs, just like any neighborhood.  Storms hit, roads crack, clubhouses flood and fires rage.  And when disaster strikes, it’s the homeowners who are forced to foot the bill to rebuild the community.  So check whether the community association carries sufficient casualty insurance to cover any emergency.  Also, considering the lean economic times, it’s important to remember that if a neighbor doesn’t pay their maintenance, the rest of the owners must pick up the slack.  Always ask how many owners typically fail to pay their bills, how much bad debt the association carries and whether they’ve had any recent special assessments to cover shortfalls in their budget.

Whether You’ve Read Them Or Not, You Must Follow the Rules: Every person who buys a home in an SOC has constructively agreed to be bound by a contract that lays out all of the guidelines that must be followed in the community (often called the documents or the covenants).  By law, these documents are supposed to be given to you by the seller of the property, but they also are publicly recorded.  Because of this, you can never argue that you didn’t know a rule existed.  If it’s in the documents, you’re required to abide by the restriction.

So what kinds of rules are common in SOCs?  Whether or not you own a pet, whether you can have guests at night, where you park, when you can use the gym or the pool, what you can wear, how your lawn looks, the color of your roof, pretty much any aspect of your life, really, can be governed by the documents unless the rule is discriminatory or violates public policy.  So it’s critical that every buyer reads the community documents before they sign their contract.

Sharing Walls is Not for Everyone: While traditional homeowners have at least a few feet of breathing room between themselves and their nearest neighbor, residents of condos and co-ops have to accept that unpleasant sounds, sights and smells are often unavoidable. Maybe the Cockatiel next door squawks every morning at sunrise, or the stuffed cabbage cooking downstairs makes you retch.  But people who share walls have to accept that close-quarters living is different than detached homeownership, and that some small nuisances have to be tolerated.  Usually, the best solution is to simply be neighborly--politely ask whether your neighbor could open a window while they cook, or keep their bird covered until at least 8 am. Sometimes, just telling people that there is a problem is a sufficient solution.

Believe What you Read, and Not What you Hear: If you’ve never attended a sales pitch for a new development, you’re in for a treat: a colorful, expressive salesperson promising palatial opulence and amenities that would make a Saudi prince jealous.  But even if they promise the world, don’t assume that’s what you’ll ultimately get.  In the majority of states, you can only legally rely on promises made in writing, and then only in the prospectus and sales contract.  So just because they’ve promised you a dozen tennis courts and a marble spa, doesn’t mean those things will ever be constructed.  And in the current economic climate, it’s an unfortunate reality that even with written promises, amenities will be dropped due to lack of interest or funds.  Buying a home in a development that hasn’t yet been built is a gamble, so do your research, read your contract, make good choices, and consider whether you might be better suited living in a more established community.

The world of SOCs is a potential minefield, but the rewards of ownership can be just as great. So follow the above guidelines and find a clear path to your ultimate goal--a home and a community that you and your family will love.

Gary A. Poliakoff and Ryan Poliakoff are co-authors of New Neighborhoods: The Consumer’s Guide to Condo, Co-op and HOA Living. For more information, please visit,

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