Important Questions to ask the HOA when buying an Oceanfront Condo:
1. What are the monthly HOA dues? What do they include? Are they charged monthly or quarterly?
NOTE: Many rental machine buildings have started including the HO6 (contents and liability) insurance in the HOA dues. If not included, HO6 usually runs around $400-450/year for basic coverage (which is $10,000 in furnishings, fixtures, and appliances replacement and $300,000 in liability coverage, which is usually what most rental management companies want you to have).
Also, landline telephone service is usually an extra charge on top of the HOA fee since the telephone is operated by an outside carrier. The charge is static each month and has long-distance and 1-900 call blocks on them. This service is only for local calls and to the front desk. Charges range between $20-28/month for most resorts.
2. Are there any special assessments in place? If so, what is the assessment paying for, how long does it last, and what is the dollar amount of the assessment?
NOTE: Associations typically charge special assessments only when absolutely needed, such as for building repairs, hurricane damage, or if there is a shortage for the building’s insurance coverage. These assessments are typically charged over a span of time in installment payments so the burden is as light as possible for each condo owner. You'll need to take into account the amount of the assessment and use that during negotiations when your are making an offer.
3. Are there are any lawsuits in place? Occasionally there are lawsuits between the HOA and another party(ies). Typically, it's construction-defect litigation between an HOA and the original developer. You have to ask about lawsuits since construction-defect CAN have an effect with obtaining financing. Not all lenders will lend on a project with construction-defect litigation in place as they see that as taking on too much risk. However, some of your local lenders here in Myrtle Beach, such as CresCom Bank and South State Bank among others, will still finance in a project with construction-defect litigation as long as the lender knows about the litigation and feels it's not a serious threat. For example, at Magnolia Pointe condos built from 2000-2006, they had construction defect litigation but it was for all minor issues so local lenders had no problem providing financing for buyers in this complex.
4. Are pets allowed for owners, their guests, or renters? This is a big one since many buyers want to be able to bring their pets with them when they buy an Oceanfront Condo. Unfortunately, there is no universal list of buildings that do and do not allow pets. You have to call the property management company and ask them if owners, guests, and/or renters are allowed to have pets. If they say "yes," then you have to ask if there are any BREED or WEIGHT restrictions. Some buildings will allow owners to have pets but only under 40 pounds. Or they might say "no vicious breeds such as Pit Bulls, Rottweilers, or Dobermans." Some HOA's say owners are allowed pets "with Board of Director's approval." And while some Oceanfront buildings, including some rental machine buildings, DO allow owners to have pets. Almost ALL Oceanfront buildings do NOT allow renters to have pets. A few, such as Sea Mist Resort, have a couple of buildings designated as "pet-friendly" for renters, but these types of buildings are few-and-far between.
5. Are motorcycles allowed on the property? Another important question since many owners want to be able to bring or ride their motorcycle to their Oceanfront resort here in Myrtle Beach. Some buildings allow them, others do not. Again, it's a "building-specific" question so you have to ask the property management company and make certain you have clarification if this is important to you. If in doubt regarding motorcycles OR pets, you can also check the Master Deed or Rules and Regulations for the building.
6. Is the building a "Right of First Refusal" building? You typically only see this in the newer Oceanfront Resorts built from 1997-2009. During that time-frame, many developers put language in their master deeds stating that the developer has the "right of first refusal" on all sales in a building. So, when you decide to sell your condo in one of these buildings, either you or your closing attorney will need to get this form from the property management company, fill it out, and send it to the developer. It will state the purchase price and unit # being sold along with the closing date. The developer then has 10 days to exercise their "right" or not. If they DO exercise their right, then the developer steps in and purchases the condo for the same price as your contract. The only person who loses out is the buyer, who then has to go find another condo to buy. This option was being exercised during the boom years of 2004-2006 by developers who wanted to purchase the condos and keep them on their rental program and/or "flip" them since market prices were going up so quickly. In today's market, it's mainly being used sparingly to keep the condos on the onsite rental program since the original developers in many resorts still own the front desk rental program. We've seen "right of first refusal" exercised recently in Grande Shores and Camelot By The Sea. However, if your buyer is planning on keeping the condo with the onsite rental program, the developer may waive their "right" and allow the buyer to purchase it as long as the buyer signs a rental agreement for “X” number of years (typically 1-3 years).
Some of the buildings with Right of First Refusal include: Anderson Ocean Club; Avista; Camelot By The Sea; Grand Atlantic; Grand Shores; Ocean Reef Resort; Prince Resort; Roxanne Towers; and Sands Beach Club. There are others so always call the property management company to confirm.