A condominium refers not to the style of a property, but to the form of ownership. In a condominium regime, generally each condominium unit owner owns the 3 dimensional space inside the unit walls, along with an interest in common with all the other condominium unit owners in the “common elements”. Some typical “common elements” might include stairwells, balconies, sidewalks, parking lots, pools, hallways, elevators, to name a few.
There are several major advantages of condominium ownership.
They are:
- You have less maintenance responsibility. Exterior maintenance and repairs are typically the responsibility of all of the unit owners, and are frequently handled by a professional property management company.
- A condominium regime often includes the use of recreational facilities. Condominium projects often have the advantage of included recreational facilities. Some common examples might include swimming pools, tennis courts, marina facilities and health club facilities.
- Condominiums are often found in locations where other forms of ownership would not be economically feasible. For example, where the cost of land is sufficiently high and maximum density would be an economic requirement, a condominium regime would be an economically viable option for development. Some examples might include prime center-city locations, waterfront locations, and other locations in very close proximity to recreational amenities (golf courses, ski slopes, etc.).
Condominium Ownership is not without its Flaws.
They include:
- In a down market, condominiums are often the first to feel the effects of the slowdown in sales and the last to rebound. In most marketplaces condominiums are a specialized product, and do not have the broad appeal a single family attached or detached home may have. Consequently, when the general real estate marketplace sneezes, the condominium sub-market may catch a cold.
- Your use of the property, particularly the exterior, is restricted. Unit owners must be willing to abide by the declaration, by-laws, rules and regulations of the condominium. If you have a penchant for pink front doors or wish to raise pigeons, a condominium unit may not be your best choice. Your life as a unit owner is governed by the decisions of the board of directors of the condominium, who are, in effect, a mini-government.
There are important considerations when selecting a condominium project.
They include:
- Carefully review all of the condominium documents. This should include the declaration and any amendments, the bylaws and plats and any amendments, the rules and regulations and any amendments, the minutes of any membership meetings and board of directors’ meetings, insurance policies, pending lawsuits, actual and proposed budgets, and any other agreements to which the condominium association is or will be a party to. Look carefully for any “special assessments” or other similar assessments. How are planned future improvements and repairs to be paid for, out of reserves or through future special assessments? Strongly consider having your attorney review these documents also.
- Try to determine how well managed the condominium project is. How much are the condominium fees per unit, and what do they pay for? Sloppiness and waste here will most certainly translate into higher future condominium fees. Is there professional property management, or is the project run by do-it-yourselfers? What percentage of the total condominium units are sold or under contract? What percentage are rental units? Sometimes, vacant units signal a serious problem with condominium fee collection, which will usually translate into higher condominium fees for the rest of the unit owners. Also, a condominium project heavily weighed with non-resident investors can sometimes pose a problem with some government underwritten financing programs.
