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Condo Glossary
Glossary of Condo Terms
What is a Condominium?

A 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.

What 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.

*Control of your own destiny.

*Broad architectural variety.

*Paying a lower purchase price than for most conventional homes.

*Energy savings.

*Less exterior maintenance.

*Prime locations.

*Superior security with closer neighbors.

*Affordable recreational facilities.

*Better neighborhood control with enforceable association rules.

*Varied group activities.

*Good resale value.

*A helpful condominium association.


The Declaration

Also 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.


The Bylaws

Often 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.


Rules and Regulations

It's 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.


The Developer or Sponsor

This 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.


The Condominium Association

This 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.


The Condominium Board

Typically, 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.


Management

Many 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.


The Condominium Fee

Also 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 common expenses.

If the association spends $120,000 per year, your share is $1,200 or $100 per month.


Special Assessments

In 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.


Communication

Every condominium establishes communications among members. Meetings, a newsletter or centrally located bulletin boards are often part of effective communications..


Conversions

A 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.


Time Sharing/Fractional Ownership

Most 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 period.

A 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-ops

The 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.

 


 

 

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