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.