Anytime you buy a piece of property, it is your responsibility as a real estate investor to do your due diligence. However, if you are interested in buying condominium property, you will need to be even more careful if the building in question is a small one. Small associations with less than a dozen units are feeling the hit of the recession particularly hard as owners either move or find themselves unable to pay dues, and the loss of income can result in some serious oversights. These oversights can range from a lack of maintenance and management – some overextended developers are actually trying to run their condo buildings themselves to save money – to failure to insure the property in the event of fire or other damage[1]. And when disaster strikes, at least some courts consider the issue of the loss of habitation to be a private legal dispute rather than something that a state attorney general or DA might investigate, while contents generally must be insured by the owner rather than the association.
This is not to say that all small condo buildings are a bad place to buy. Just make sure that you have not only the assurance of the HOA that the proper protective measures are in place, but that you have seen actual proof of the policies as well.
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[1] http://ctwatchdog.com/2011/06/05/small-condominium-associations-are-dangerous
