What Is a Condominium?
A condominium (also called a "condo") is a large property complex comprised of individual units, and each unit is owned separately. Ownership usually includes a nonexclusive interest in certain "community property" controlled by the condominium management. Condominium management is usually made up of a board of unit owners who oversees the daily operation of the complex, such as lawn maintenance and snow removal.
- A condominium, or condo, is an individually owned unit in a complex or building of units.
- A condo owner owns the air space inside their condo, sharing an ownership interest in the community property, such as the floor, walls, sidewalks, stairwells, and exterior areas.
- A general requirement of a condo owner is monthly payments to a condominium association that is in charge of property upkeep.
- The main difference between an apartment and a condo is ownership; an apartment is generally rented and a condo is owned.
- If major repairs are needed, condo owners may be assessed a special fee, in addition to their regular fees, to cover such costs.
Watch Now: How Does Condominium Ownership Work?
How a Condominium Works
Owning the air space of a unit in a multi-unit development is one description of a condo. As this description indicates, the condo owner's title to the property does not include the four walls that divide their 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 highrise that provides housing for several different families. However, the concept is not limited to high-rise buildings, nor is the concept limited to residential properties. Residential townhouses are sometimes developed as condominiums, and the concept is also applied to commercial properties, such as office condominiums.
Condos, like apartments, are great for residents who enjoy living in a shared community without the hassle of maintaining upkeep, such as lawn work and property management.
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 condo association 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.
Condominium vs. Apartment
The big difference between a condo and an apartment is that you generally own a condo, while you rent an apartment. Apartment buildings are usually owned by a single owner (such as a property management company) and the buildings are used solely for rental purposes. However, condos that are rented out to tenants are sometimes referred to as apartments.
Thus, the only notable difference between a condominium and an apartment is ownership. A condo is generally something you own, while an apartment is something you rent.
Requirements for a Condominium
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 the 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—the board that manages the development.
Unit owners pay fees to the condominium association. 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 the daily operation of the development. Condo 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.
Advantages and Disadvantages of Condos
Purchasing a home is considered one of the biggest investments a person will make in their lifetime. Although rewarding, it is important to understand the implications of purchasing real estate, especially a condo.
Condo living affords its owners several benefits, such as access to amenities that are ordinarily only accessible at a cost. Owners can enjoy the exclusive use of swimming pools, tennis courts, and fitness facilities at no extra cost. Some high-end condos even provide access to spas, rooftop entertainment spaces, and gardens.
Many condo associations employ security services to safeguard their community and protect their residents. Whether enclosed within gates, surveilled with cameras, or patrolled by security personnel, the community benefits from extra eyes warding off would-be intruders (and additional peace of mind as a result).
Condo owners are required to pay condo association fees to maintain the integrity of the community. Mostly, the condo fees provide for the maintenance of the property, including common areas, exterior structures, and some interior structures and appliances. Fees can vary according to what the fees support, and some can be expensive. For major repairs, condo owners may be assessed a special fee to cover the costs.
Much like apartments, condos often share common walls, as well as common spaces. Living in close proximity and sharing walls and spaces limits the amount of privacy one can enjoy. In contrast to single-family detached houses, residents must tolerate neighborly nuisances.
In addition, condos are managed by condo associations that impose certain rules and restrictions on owners. The condo association governs how common spaces can be used, to what extent condo owners can make improvements or changes to their units, and sometimes who can enjoy those spaces with them.
What Does Condo Mean?
A condo, short for condominium, is an individually owned residential unit in a building or complex comprised of other residential units. Condo owners share a common space and often pay association fees to maintain the common space, amenities, and other shared resources.
What Is the Difference Between an Apartment and a Condo?
Apartments are individual residential units within a building or complex that are rented by their occupants. In contrast, condos are residential units within a building or complex that are separately owned.
Are Condos Cheaper Than Houses?
With all things equal, condos are generally less expensive than houses. Condo owners pay an association fee that covers maintenance costs, amenities, and other resources. These fees are generally less than the costs to maintain a house. However, some condos, especially luxury condos in affluent areas, can command much more than the average house.
Are Condos Cheaper Than Apartments?
Whether condos are less expensive than apartments depends on several factors, such as location, size, and amenities. Apartment rent is charged at a premium to generate a profit or income, making the direct cost to reside in the unit more expensive than owning a condo. However, on average, renting an apartment is less expensive than owning a condo as apartment renters do not pay association fees. Any maintenance costs are absorbed by the apartment owners, rather than the tenants. When major work is not covered by the condo association fees, condo owners are equally responsible for contributing to the cost. Apartment renters are not responsible for paying for any major work needed to the complex or building.
What Is a Condo Assessment?
An assessment is a fee billed to condo owners for major repairs or enhancements not covered by the regular condo fees. The assessment fee is generally based on the size of the unit. If all units are the same size, each owner will pay an equal assessment amount.
The Bottom Line
A condominium, or condo, is an individually owned residential unit in a complex or building of like units. Condo owners own their units but share common spaces, amenities, and other resources. They pay condo fees, which cover maintenance costs, amenities, and the upkeep of common spaces. If major repairs are needed and condo association fees are insufficient to cover those costs, condo owners will be charged a special assessment. Considering the added fees, owning a condo is generally less expensive than owning a house. There are advantages and disadvantages to owning a condo. Therefore, it is important to understand the implications before committing to purchase one.