Many people aged 65-plus start looking at condos as a step towards downsizing their homeownership responsibilities. A condo purchase can be an excellent decision at that time in one’s life. However, buying a condo requires your due diligence to investigate issues that you would not be looking at in the purchase of a home.

The first thing to understand about condominiums is that the word “condominium” does not refer to a style of home, but rather, the style of management. When you purchase a condo, you become a co-investor with the other condo owners as part of a homeowners association. The property is managed by a board of directors elected by the association members.

It’s important to do your due diligence up front because on the one hand, you could buy into an association of convivial people who are financially and administratively managing the association very competently. Or, you could become a co-investor with partners who are incompetently managing the property, and possibly with constant personal conflicts and toxic disputes among the members.

The wonderful stories and the not-so-good stories are aplenty.

So how do you do your due diligence?

A first step is to obtain the minutes of association meetings for at least six months, as well as the last annual report. An association is required to keep minutes of owner meetings and special director meetings.

The purpose of the minutes is to record the actions and decisions of the board and votes of the members. Minutes are not meant to be a detailed description of discussions. While the minutes may paint an incomplete picture, they should at least give you a sense of the management style of the board and the types of issues coming before the board that require board decision making.

You’ll want copies of the Declaration, the Bylaws, and all documented rules and regulations from the association.

How old is the development you are buying into? Is it a new project, or one that is 10 years old … 30 years old?

An older development isn’t necessarily a bad thing, but you need information before purchasing. Has there been deferred maintenance? Are major capital expenses expected anytime soon, such as roofs or driveway paving? Does the older community have adequate cash reserves? And importantly, has the older association conducted reserve studies?

A reserve study is a financial analysis of an association’s buildings and financial position. It is a crucial management tool. It looks at every component of the buildings, and projects what the maintenance and replacement costs will be over a 30-year period, and then assigns a monthly cost per owner over that time period. It answers questions like, what does each owner have to pay in monthly dues to cover the cost of roofs that will need to be replaced in 12 years? Repave the driveways in 7 years? Paint all the doors in 3 years?

On-site reserve studies at least every three years is the only way a project can be responsibly managed over the long haul. Maine has not adopted specific laws regarding reserve studies, or how much an association needs to maintain in cash reserves. This is why you need to verify for yourself, especially when entering an older project.

If the owners who have lived there for a decade or more have under-taxed themselves by keeping association dues artificially low over an extended period, you as a new owner will end up picking up part of the tab in the form of special assessments to cover major costs at some future date.

Don’t be persuaded by low monthly association fees in one community versus another. Low monthly fees are not necessarily a sign of good management, and they can be a sign of poor management, so you need to dig deeper.

Your purchase offer on a condominium should include a contingency clause that specifies your acceptance of the association governance policies and financial position. Once your purchase offer is accepted, you’ll be given access to at least two years worth of financial statements.

Personally, our opinion is that an association that is more than five years old needs to have a reserve study, and have their dues adequately aligned with the results of the reserve study, with adequate funding of the cash reserve account.

You should verify if the association has outstanding bank loans. Some associations have used this tactic instead of a large special assessment upon the owners to cover previous inadequate funding of the cash reserve. That bank loan is another way new owners end up picking up costs for past problems.

Please do adequate homework before purchasing a condo. You want to buy into a well-managed community, and avoid the pitfalls of a community that is not adequately managed and funded. You should attend the board meetings, and maybe consider volunteering to be on the board.

All of that said, a condo purchase can be an excellent option to downsize the responsibilities of caring for a larger home.

Jill Wallace is the owner and director of Elm Street Assisted Living in Topsham. Steve Raymond is director of community outreach at the Lincoln Home in Newcastle, and the producer and host of the television show “Spotlight on Seniors.”