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. Homeowners Association Fee - HOA ...

    An amount of money that must be paid monthly by owners of certain ...
  2. Single Entity Coverage

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

    A type of insurance coverage that applies to communally used ...
  4. Limited Common Elements

    Elements of condominium living units that are assigned to specific ...
  5. Landominium

    A type of residential property in which the owner owns both the ...
  6. Time Sharing

    A hybrid form of ownership. A time share is the right to occupy ...
Related Articles
  1. Personal Finance

    Condo-Buying Walkthrough: Condo Characteristics

    Condominium ownership is considered a hybrid form of ownership because it falls outside traditional structures of property ownership. Certain legal and technical characteristics help define condominium ...
  2. Personal Finance

    Condo-Buying Walkthrough: Condominium Fees

    Condominium fees are monthly dues paid by each unit owner. The fees are commonly based on the percentage of the development that is owned by each individual owner. For example, the owner of a ...
  3. Personal Finance

    Condo-Buying Walkthrough: Reasons To Buy A Condo

    Many features of condominium ownership are attractive to people exploring different options when it comes to the purchase of real estate. AmenitiesCondominium developments often provide access ...
  4. Personal Finance

    4 Money Misconceptions About Condominiums

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

    The Complete Guide To Buying A Condo

    A step by step look at everything you need to know about purchasing a condo.
  6. Personal Finance

    Vacation Property Walkthrough: Maintaining A Vacation Home

    Since the owner will be absent some (or most) of the time, it is important to make plans to take care of the property. If the vacation property is a condominium unit, the maintenance responsibilities ...
  7. Personal Finance

    An Introduction To Buying A Condominium

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

    Condo-Buying Walkthrough: Choices When Buying A Condo

    The search for a condominium requires buyers to make decisions regarding how they would like to approach the process and which markets they wish to explore. Real Estate AgentsJust like looking ...
  9. Personal Finance

    Condo-Buying Walkthrough: Obtaining A Mortgage For Your Condo

    Getting a mortgage on a condominium unit has its challenges. Strict standards make it difficult to qualify for a condominium loan, and loan costs may be higher on a condo than for other types ...
  10. 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.
RELATED FAQS
  1. How does securitization play a role in the implementation of PACE financing?

  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. How are capitalism and private property related?

    Read about the relationship between capitalism and private property rights, and learn why voluntary trade would collapse ... Read Answer >>
Trading Center