of Condo Terms
is a Condominium?
condominium is individual ownership of a single
unit in a multi-unit building or complex of
buildings. As an owner, you have full title
to your individual unit plus a share in the
grounds, recreational facilities and other common
properties in the complex.
are the Advantages of Owning a Condo?
Subject to certain qualifications, traditional
advantages of home ownership including deducting
mortgage interest and property taxes. Always
check with your tax advisor for specific information.
of your own destiny.
a lower purchase price than for most conventional
security with closer neighbors.
neighborhood control with enforceable association
helpful condominium association.
called master deed; declaration of restrictions;
covenants, conditions and restrictions (CCR);
the declaration is the most important document
of all. It sets forth the sponsor/developer's
intention in creating the condominium as well
as the details of the process. It covers things
such as voting rights, property description,
general common element, the percentage of elements
each unit owns and the operation of the association.
This is a legal document, written according
to state laws and filed in the land records.
these are integrated in the declaration. Bylaws
cover in detail things such as the duties of
the board, conduct of meetings and elections,
preparation of budgets and adoption and enforcement
of rules and regulations.
common for the condo board to publish rules
and regulations separately from the bylaws,
and in greater detail. These deal with matters
such as noise, pets, parking, personal contact
and other topics.
Developer or Sponsor
is the person or organization that created the
condominium. A sponsor controls the condominium
from its inception through the initial stages
and sometimes until he or she no longer owns
most of the units. When a specified number of
units have been sold, control passes to resident
members of the board of directors.
association is the governing body of the condominium.
Every unit owner automatically belongs to it
and membership carries with it the right to
voice opinions and vote at meetings.
a board of directors is elected by the members
of the association to set policy; enforce provisions
of the declaration, bylaws, and rules; and conduct
the association's business affairs. Often the
board retains a professional manager to hire
and fire employees, negotiate contracts and
keep financial records.
condominiums employ professional management.
This could be a single individual or several
people, depending on the size of the development.
Management relieves the board of directors of
the day-to-day responsibilities.
called the assessment, this fee is the amount
you pay each month to enable the association
to meet the expenses of operating the condominium.
Usually the amount depends on your fractional
ownership of the common elements. It is determined
by the original purchase price of your unit
or by its size. As an example: You paid $80,000.00
for one of 100 similarly priced condo units;
you therefore own one percent of the condo's
If the association spends $120,000 per year,
your share is $1,200 or $100 per month.
a well run operation, special assessments are
rarely necessary. But they may be required when
there isn't enough cash in the association's
reserve accounts to meet an emergency. Consider
that emergencies can arise even in the best
run associations. And, just as if you lived
in a conventional, detached home and your furnace
broke down, you'd need a special assessment
to get it repaired.
condominium establishes communications among
members. Meetings, a newsletter or centrally
located bulletin boards are often part of effective
conversion is simply a condo that used to be
something else, usually a rental apartment building.
Tenants receive advance notice that the building
will be converted and given the option of buying
their apartment at a discount before it is offered
to the public. One of the best ways to tell
if the price is right and the building is sound
is to find out what percentage of the original
tenants elected to stay. If many do, you can
be pretty well assured that the converter is
asking a fair price.
often, when you buy a time-share in a condo,
you obtain the right to use it during a designated
time period each year. In a sense, you own the
condo for that period of time, an arrangement
sometimes called "interval ownership".
In true interval ownership, you receive a title
stating that you do own the condo for the specified
time-share can be sold, rented, bequeathed in
a will or swapped. There are even organizations
who specialize in arranging swaps. For example,
if you want to go skiing in March instead of
using your time share in Florida, these organizations
can find a time share owner in Aspen who would
prefer a sunny spring vacation.
co-op bears some resemblance to the condo but
differs in one basic respect: If you reside
in a co-op, you are a stockholder in a corporation,
not the owner of an individual unit. The value
of the unit you occupy determines the amount
of stock you receive and its cost to you, and
you do receive a proprietary lease from the
co-op association on your unit. However, there
is only one property title for the entire building
or complex and the co-op corporation holds it.
If you decide to sell your stock, the buyer
pays you for it with the understanding that
he or she will take over the proprietary lease
on you unit that you hold.