So you’ve just closed on a lovely condo in a brand new association – congratulations! Now it’s time to roll up your sleeves and take care of a few logistical items:
MEET YOUR CO-OWNERS
Your first order of business should be to set up a meeting of the unit owners to establish roles and set expectations. For example:
- Who will be the point person for collecting condo fees and paying bills?
- Do you want to do your own snow removal and landscaping or contract that out? If you’re doing this on your own, how will you divvy up or share the work?
- Do you need to buy trash barrels and/or order recycling bins from the city?
- Are there any short-term projects that need to be done?
- Is the budget created by the developer realistic or do you need to make any changes?
Note: budgets do not need to be recorded, and most small condo docs are written in such a way that new owners automatically become trustees once the deed is conveyed, so it’s generally not required to record anything, but you should confirm this with your attorney.
Suggestion: although most small associations are run fairly informally, it can help to have someone write up a recap of conversations and decisions made at your meetings, to avoid misunderstandings down the road.
SET UP YOUR BANK ACCOUNT
Next up: you’ll need to set up your banking. Generally, the developer will have already established an account for the association, so you will likely need him/her to go with you to the bank to sign the account over to you. With some banks, only the person handing the finances will need to be a signer on the account; others require all owners to be signers.
Note: some associations keep two accounts – one for operating expenses and another for holding reserves (basically a savings account). It’s up to you to decide whether you want both or can get by with just one.
Suggestion: even though you may plan to pay bills electronically, you should still order some checks for paying contractors, reimbursing unit owners who may purchase things for the condo, etc. You may never use them, but better that then not to have them when you need them.
By the way, you’d think that banks in a market dominated by condos would have the system down pat, but I haven’t found that to be the case, so expect some passing the buck among bank staff before you find someone who knows how to help you.
If for some reason an account has not already been established, or you want to move the account to another bank, make sure you have the association’s tax ID number (developer should have set this up) and a copy of your condo docs, in addition to the usual identification.
SET UP ANY COMMON UTILITIES
With your financial person established and your bank account up and running, you’re now in a position to pay bills, so you should make sure your common utilities set up and coming to the right person. Getting this done is pretty straightforward, though you will likely need the tax ID handy, since these accounts are considered commercial.
BE PREPARED FOR TAXES
If your building is a conversion of a former multi-family property, it generally takes a while for your city to re-assess it as individual condo units. That means that for the near-term, you and your co-owners will be splitting the taxes on the multi-family, based on your respective equity (percentage ownership) in the association. Although it’s slightly more of a pain, it’s actually nice because what you’ll pay for the old multi-family tax is generally way less that what you’ll be paying once you’re re-assessed as condos.
Note: the tax bills will likely come to the property addressed to the developer/former owner, so keep your eye out for anything official looking from the city and don’t throw it away!
Also note: your lender may have rolled estimated taxes into your mortgage payments, in which case, it may feel like you’re paying twice. However, your lender will run a periodic “escrow analysis,” and when they see they have not been billed for your taxes, they will reimburse you the excess funds. Just keep on them about that to be sure it happens.
That’s it! Obviously, things will come up as you settle into your new association, but if you take care of these things in the beginning, you’re off to a great start!