How to evaluate a condominium
Reserve fund, management, arrears, minutes, major repairs, and litigation.
A condominium is only as sound as its association: check the reserve balance and funding method, arrears, the long-term repair plan and meeting minutes, planned major work, insurance, and any litigation — a low monthly fee that underfunds the reserve is a future special assessment.
Key points
- Check the reserve balance, funding method, and whether it uses a steep step-up schedule.
- Review arrears, association borrowing, and the long-term repair plan.
- Read the meeting minutes for disputes, planned work, and governance.
- A low monthly fee that underfunds the reserve is a future special assessment.
You are buying into an association
When you buy a condominium you buy into its association’s finances and governance, so inspect them as carefully as the unit. Check the reserve (修繕積立金) balance per square meter and the current monthly reserve, the funding method (even or sharply escalating), the long-term (30-year-plus) repair plan and its update date, the estimated next major work and any funding gap, owner arrears, association borrowing, the management-fee trend, and the concentration of commercial or absentee ownership. MLIT specifically encourages moving from step-up reserve structures toward more even funding.
Minutes, litigation, and planned work
Read the meeting minutes: they reveal unresolved disputes, unpopular decisions, meeting attendance, and the true state of governance. Check insurance and earthquake coverage, and any unresolved litigation. Look at planned elevator, pipe, façade, and seismic work, because those are the large costs that will hit the reserve. A low current monthly fee should not score positively if it creates future special assessments — a well-funded association with a credible plan is worth more than a cheap fee that hides a shortfall.
Key points to carry away: Check the reserve balance, funding method, and whether it uses a steep step-up schedule; Review arrears, association borrowing, and the long-term repair plan; Read the meeting minutes for disputes, planned work, and governance; A low monthly fee that underfunds the reserve is a future special assessment. Use the linked guides and calculators for the full decision, and confirm anything material with the lender, a licensed broker, a judicial scrivener, or a tax accountant before you act.
Who this is for
- Condominium buyers
- Anyone comparing building finances
What this is not
- A substitute for reading the actual accounts
- A low monthly fee is not a saving if the reserve is underfunded; it signals a future special assessment.
Frequently asked questions
What should I check for a condominium?
Reserves, repair plan, arrears, minutes, bylaws, insurance, litigation, and planned major work.
What is a condominium management fee?
Payment for ordinary shared operations; it is not saved for major repairs (that is the repair reserve).
What is a repair reserve?
Money accumulated for major capital repairs such as roof, façade, pipes, and elevators.
What is a special assessment?
An extra owner payment when reserves are insufficient for needed work.