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If you are purchasing a condominum or townhouse in Silicon Valley, you will need to consider a few things more than if you were buying a house that’s not held in condo ownership*.

Like what?

Most of all, with a condo or townhome (or planned unit development) you are buying a fraction of the entire complex as well as your own living space (condo or townhome). Condominium ownership includes a percentage of the community’s property. You will benefit from it, but you also will be responsible for it.

Additionally, there are a lot of  documents to read and understand when purchasing a condominium or town house. You will need to be able to accept the rules, bylaws, financial statements, meeting minutes, articles of incorporation and more.  You will want to read the newsletter (and minutes) carefully to see if there are any “issues” in the complex.  Plan to invest several hours in reading and digesting the information in the 2-3″ stack of papers.

Naturally another difference is that your neighbors will be in very close proximity.  If you are a non-smoker but the neighbor in the unit next door smokes, you may not be too happy about it later.  A few months ago I showed a Rivermark (Santa Clara) townhouse that was just darling but the next door neighbor came out and smoked on the front porch while we were there.  My buyers didn’t want to purchase the home for that reason – they did not want to deal with the smell later. You may have similar concerns about other odors or noises.

Perhaps most important are the financial issues and risks:

  When you purchase a condo, you also will be accepting the community’s ability to saddle you with an assesment if the reserves are not good enough. That’s a big deal. You must understand the risk of getting assessments.  For example, let’s say that when the Home Owners Association (HOA) does its annual study of reserves it comes up short but they need to re-roof all the buildings (or tent for termites or do some other work).  What happens? They will either raise the monthly dues or they will levy a special assessment to pay for it.

Additionally, when you buy into a community with an HOA that has the right to enforce rules, you also must consider what those rules may be. Rules might be big or small such as:

“you may not wash your car on the premesis”

“no pets larger than 40 pounds”

“curtains facing the front of the home may only be white or beige colored”

“no smoking, inside or out” (now the law in Belmont)

All of this is to say, simply: if you are buying a condo, townhouse, or PUD in the San Jose area, realize you will need to read and understand and accept a large mound of paperwork. Your ownership rights and duties are a little different than when you purchase a house.  Do not just “assume it’s boilerplate” and skip it. Do your “due dilligence”. Read it and understand it before you buy it!

*There are townhouses and houses which are held in “condo ownership”. Just because something looks, architecturally, like a townhouse or a house does not mean that the legal ownership is not condominium.  The Villas of Almaden is a wonderful community but the houses there are held in condo ownership, for instance.  In Los Gatos there are townhomes held in condo ownership too…