Condominium

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. Homeowners Association Fee - HOA ...

    An amount of money that must be paid monthly by owners of certain ...
  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. Limited Common Elements

    Elements of condominium living units that are assigned to specific ...
  6. All-In Coverage

    A type of insurance coverage that applies to communally used ...
Related Articles
  1. Personal Finance

    An Introduction To Buying A Condominium

    This real estate investment provides unique advantages - and challenges.
  2. Personal Finance

    Beach Property in California: The Pros & Cons

    Learn the pros and cons of buying a beach condo in California, and how to protect yourself from common pitfalls many condominium buyers experience.
  3. Personal Finance

    9 Things You Need to Know About Homeowners' Associations

    Restrictive rules and high fees are just some of the things to watch out for before joining a homeowners' association or HOA.
  4. Personal Finance

    Understanding Homeowners' Associations

    A homeowners’ association (HOA) makes and enforces rules for residents within its jurisdiction.
  5. Managing Wealth

    Pros & Cons of Investing in a Condo with Friends

    Buying a beach house or big-city pied-à-terre with friends can save money and make sense, but only if you set it up right. Here's how to avoid trouble. thoroughly research and discuss potential ...
  6. Personal Finance

    Choosing Condominium Over Home Ownership

    Think of a condominium as an apartment you own.
  7. Personal Finance

    Tips on Buying a Beach Condo in California

    Few properties can top a beach condo in California, and analyzing the condo's ins and outs is the best way to ensure you get the most bang for your buck.
  8. Personal Finance

    Don't Ignore Maintenance Fees When Buying Real Estate

    Buying an apartment or condo costs more then the price of the unit. There are also unavoidable monthly maintenance fees that can vary greatly.
  9. Personal Finance

    9 Tips for Handling Homeowners’ Associations

    Before you buy property in a community with an HOA, there are nine things you should do.
  10. Managing Wealth

    How To Buy A Beach Condo In The Philippines

    Foreigners can't buy land in the Philippines – but they can buy condos. Here's how to get one at the beach.
RELATED FAQS
  1. How does securitization play a role in the implementation of PACE financing?

  2. What are the differences between investing in real estate and stocks?

    Invest in real estate by purchasing physical property or buildings, or invest in stocks by buying a claim to a company and ... Read Answer >>
  3. How is Net Operating Income (NOI) used in real estate?

    Find out more about net operating income, what it measures and how it is used to analyze a real estate property's return. Read Answer >>
  4. What do states do with unclaimed property?

    Understand what unclaimed property is and what types of property can be considered abandoned or unclaimed. Learn what states ... Read Answer >>
  5. What is the difference between real estate and real property?

    Understand how real estate is legally different from real property and the implications of that difference for each property ... Read Answer >>
  6. Can anyone own common stock in a company?

    Understand who can purchase common stock as well as the key characteristics that differentiate common stock from preferred ... Read Answer >>
Trading Center