BEST ANSWER
FIRST ANSWER
Hi Tootsie,
During condo subdivision an HOA has to be created. It's Articles of Incorporation are filed with the Secretary of State. CC&R's should be drafted by the developer and recorded with the county before you agree to buy.
It sounds like the developer/seller has created an operating budget already, which will include common utilities, hazard insurance for the building, et cetera. The share will likely be divided by some function of size. It sounds like the total budgeted liability for the building is $500. The upper unit is probably larger than the lower unit by some total such that after considering their relative portions it pays 3/5ths of the budget liability. This budget is probably a bare-bones minimum and likely requires self management of the building, HOA and maintenance.
The HOA is created during condo subdivision, so insurance, CC&R's, bylaws and other governing documents should exist before you agree to purchase. It is possible, though, that they are not yet complete or haven't been recorded. Regardless, you shouldn't have to draft these things.
You should definitely be using a real estate agent through this process, though, and you're best served using your own agent - not the seller's. As new construction there are additional aspects to this purchase you need to be aware of. Your agent should be guiding through all of these in addition to the questions you asked.
By the way, be sure to save all of the documents you receive. The governing docs are required in order to sell and are costly to produce if you lose them. They'll be helpful while developing a working relationship with the other owner, too. Despite buying a condo your responsibilities will more closely resemble that of a detached homeowner.
If you'd like more detailed guidance as you sort through this process, please call or email.
Good luck!
Jason Chapin
McGuire Urban Bay
415-420-1143
jchapin@mcguire.com
Wed May 27 2009, 00:45
Fair Housing and Equal Opportunity