How do I know if it’s a Condo? Because of the changes to the condominium approval/review processes, you must understand what type of property you are dealing with BEFORE you move forward with listing, selling, or buying a property in Colorado.

Condominiums present financing challenges better addressed at the beginning of the transaction, as opposed to later. For example, There’s no point writing up an offer at midnight for a buyer when this project isn’t on an approved list and the project wouldn’t qualify even if it was submitted for review.

How Do We Define Condominiums in Colorado

A form of ownership where units are owned by individuals, but the land and common areas are owned jointly with all owners.

How To Check If It’s A Condominium

So what should you do?

Do Not Accept Misinformation Or Verbal Information

When buying a condominium for sale in Colorado, especially with the recent changes to approval processes, relying solely on MLS information or the word of the seller can be a recipe for disaster.

Here’s why the legal description is the single most important document you need to verify the condo status and avoid unexpected hurdles down the road:

MLS listings can contain errors, especially regarding condo designation. Data entry mistakes or outdated information might categorize a condo as a townhome, leading to financing issues later.

Sellers may not be fully aware of the condo status or might intentionally omit it to attract a wider pool of buyers.

Terms like townhomes or villas can be misleading. The listing might not explicitly state condominium, creating confusion for buyers unfamiliar with condo ownership.

The legal description is a detailed legal document outlining the exact boundaries of the unit you’re purchasing. It also clarifies ownership specifics, including:

Shared vs. Individual Ownership clarifies if you own the land beneath the unit (rare in condos) or if it’s jointly owned by all condo owners.

The legal description specifies which areas, like hallways, pools, or landscaping, are considered “common” and, therefore, jointly owned by all condo residents.

By carefully examining the legal description, you can uncover crucial information that could impact your purchase significantly:

• Financing Eligibility: Certain loan types, like FHA or VA loans, have stricter requirements for condo projects. The legal description will reveal details about project approval status, a major factor influencing loan eligibility.
• Hidden Costs: Understanding the extent of common area ownership from the legal description allows you to anticipate potential costs associated with HOA condominium fees, maintenance responsibilities, and future repairs.
• Unexpected Restrictions: The legal description might reveal limitations on the property, such as pet restrictions or rental limitations, which could impact your lifestyle or investment plans.

Do Not Rely On The Project Name For Determination

When searching for a condo in Colorado, it can be tempting to rely on the project name to determine its ownership structure.

However, this approach can lead you down a rabbit hole of confusion and potential problems. Developers are known to use enticing and sometimes misleading names for their projects. For instance, a project named “Shady Pines Townhomes” might lead you to believe it’s a collection of individually owned townhouses, not condominiums. This assumption could have serious consequences later in the buying process.

The reason for this caution lies in the fact that the project name has no bearing on the legal ownership structure.

Shady Pines Townhomes could very well be a Vail Colorado condominium project, even though the title implies otherwise. This can create a situation where buyers, unaware of the true ownership structure, move forward with the purchase only to discover financing issues due to the condo’s lack of project approval.

Here’s why project names can be so misleading:

Marketing Tactic: Developers often choose names that are catchy and appealing to a broad audience. “Townhomes” might sound more familiar or desirable to some buyers compared to “condominiums near me.”

Focus on Aesthetics: The name might focus on the project’s location or architectural style, neglecting to mention the crucial details of ownership.

Don’t be lulled into a false sense of security by the project name. It’s simply not a reliable indicator of whether you’re dealing with a condo or another type of ownership structure.

Read The Legal Description

When navigating the Colorado condo market, the legal description of the unit you’re considering becomes your key to unlocking the truth about the ownership structure. This seemingly complex document holds the power to reveal whether you’re dealing with a condo or another property type. Here’s how the legal description acts as a decoder ring in this process:

The legal description meticulously details the precise boundaries of the unit you’re interested in. It’s a legal document outlining not just the physical space of your unit but also the ownership rights associated with it. A crucial aspect to examine within this description is the mention of a “lot.”

If the legal description includes a lot designation, it suggests a different ownership structure than a condominium Colorado. In such cases, you might be looking at a detached single-family home, a townhouse with individual ownership of the land beneath the unit, or another type of property altogether.

However, if the legal description makes no mention of a lot, it’s a strong indication that you’re dealing with a luxury condominium. In condo ownership, the land itself is typically not owned by individual unit owners. Instead, it’s jointly owned by all condo residents through a homeowners association (HOA). The legal description will focus on the specific unit boundaries within the overall property, highlighting the shared ownership of the land.

Understanding whether the legal description mentions a lot is crucial because it directly impacts several aspects of your purchase:

• Financing: Certain loan types, like FHA or VA loans, have stricter requirements for condo projects. If the legal description reveals no lot designation confirming condo ownership, you’ll need to ensure the project has the necessary approvals for these loan types to be viable options.
• HOA Fees and Responsibilities: Condo ownership typically comes with HOA fees that cover the maintenance of common areas like hallways, landscaping, and amenities. The lack of a lot in the legal description suggests these shared areas exist, and you can expect associated HOA fees and responsibilities.
• Investment Potential: Understanding the condo ownership structure can help you anticipate potential restrictions on renting out your unit, which might impact your investment plans.

While the legal description is a powerful tool, it’s just the first step. To gain a complete picture, review the project’s governing documents. These documents outline the HOA fees, rules, and maintenance responsibilities associated with the specific condo project. By combining the insights from the legal description and project documents, you’ll be well-equipped to make informed decisions about your potential condo purchase.

Contact a Trusted Lender

Throughout this discussion, we’ve emphasized the importance of scrutinizing the legal description to determine condo ownership. However, there’s another valuable resource at your disposal: your trusted lender. An experienced mortgage professional can be your secret weapon in navigating the complexities of condo financing, especially in Colorado with its recent changes to project approval processes.

So, how exactly can your lender help you identify a condo? Their expertise comes into play in a few key ways:

Lenders are well-versed in the intricacies of condo project approvals in Colorado. They can quickly access databases and verify if a specific project meets the necessary criteria for financing with certain loan types, like FHA or VA loans. By simply sharing the project name or address, your lender can confirm its approval status, saving you time and potential headaches down the road.

Also, there’s a specific exemption in Colorado for site condominiums. These are unique properties where the units are detached and have no shared walls or garages. While technically condominiums are due to shared ownership of common areas, they might not be readily apparent from the outset. Your lender can identify these special cases and advise you on any financing implications they might have.