DEFINITION of 'Condominium'

Condominium refers to a large property complex divided into individual units and sold. Ownership usually includes a nonexclusive interest in certain "common properties" controlled by the condominium management. Condominium management is usually made up of a board of unit owners who sees to the day-to-day operation of the complex, such as lawn maintenance and snow removal.

BREAKING DOWN 'Condominium'

Owning the air space of a unit in a multi-unit development is one description of a condominium. As this description indicates, the condo owner's title to the property does not include the four walls that divide his unit from other units or common areas in the property. The floor, ceiling, sidewalks, stairwells and exterior areas are all part of the common ownership of the condo.

One common type of condominium is a residential high-rise that provides housing for several different families; however, the concept is not limited to high-rise buildings nor to residential properties. Residential townhouses are sometimes developed as condominiums, and the concept is also applied to commercial properties, such as an office condominium.

The Declaration of Covenants, Conditions and Restrictions

The declaration of covenants, conditions and restrictions is a legal document that sets forth the regulations for owners of units in a condominium. This document defines acceptable use of the unit. It describes the owner's use of limited common areas and general common areas. The declaration includes rules for selecting the board for the homeowners' association, which is a board that manages the development.

The Homeowners' Association

Unit owners pay fees to the homeowners' association (HOA). These fees generally include the cost of insuring the building, shared utilities and a reserve of funds for future maintenance of the building. The fees may also include the fees the association pays to a management company for daily operation of the development. HOA fees are subject to increase, and if the building requires major maintenance, any costs that are not available in the reserve funds can be billed to the unit owners.

Parking Spaces and Garages

Condominium developers differ in the ways they provide parking spaces and garages to unit owners. In some developments, these spaces are reserved as limited common areas, and the HOA maintains ownership but gives exclusive rights for the unit owner to use the space or garage. In other developments, the unit owner buys the garage or parking space and has ownership. However, the covenants, conditions and restrictions may still limit the owner's ability to sell or rent the space independent of the unit itself.

RELATED TERMS
  1. Condominium Fee

    A maintenance fee charged by a condominium complex to cover the ...
  2. Limited Common Elements

    Elements of condominium living units that are assigned to specific ...
  3. Single Entity Coverage

    A type of insurance policy that covers all real property in a ...
  4. Bare Walls Coverage

    A type of insurance coverage that applies to communally used ...
  5. Homeowners Association Fee - HOA ...

    An amount of money that must be paid monthly by owners of certain ...
  6. Homeowner's Association - HOA

    An organization in a subdivision, planned community or condominium ...
Related Articles
  1. Investing

    4 Money Misconceptions About Condominiums

    Condo fees and special assessments scare many owners away from condo ownership, but is this fear justified?
  2. Investing

    The Complete Guide To Buying A Condo

    A step by step look at everything you need to know about purchasing a condo.
Hot Definitions
  1. Money Market

    A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. ...
  2. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network is permanently recorded.
  3. Fintech

    Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.
  4. Ex-Dividend

    A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be ...
  5. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
  6. Taxable Income

    Taxable income is described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments ...
Trading Center