Condominium Ownership Differences

Condominiums. iStockPhoto

Definition: A condominium is one of a group of housing units where each homeowner owns their individual unit space, and all the dwellings share ownership of areas of common use.

The individual units normally share walls, but that isn't a requirement. The main difference in condos and regular single homes is that there is no individual ownership of a plot of land. All the land in the condominium project is owned in common by all the homeowners.

Usually, the exterior maintenance is paid for out of homeowner dues collected and managed under strict rules. The exterior walls and roof are insured by the condominium association, while all interior walls and items are insured by the homeowner.

Condominium Ownership Comes with Rules & Limitations

There are many good reasons for owning a condominium.  You may buy one in a vacation area that you frequent often.  There are some tax breaks of ownership and you don't have to rent hotel rooms during your frequent visits.  

Another benefit is the exterior and structural maintenance aspect of condo ownership.  Whether a vacation home or a primary residence, the owner need not deal with landscaping, mowing grass, exterior maintenance or other repair issues related to the exterior of the units and the common areas.  Retirees like this, and vacation owners love it.  Investors like them as well, as they aren't relying on tenants for exterior maintenance.

Insurance and some utilities can be less expensive as well.  The condo owner need only insure the interior of their unit, not the exterior and structure overall.  However, all of these benefits come at a cost, and that's the Condominium Association fee component.  There will be a monthly or quarterly fee paid into the condo association to take care of all common costs, insurance, taxes, maintenance, repairs, some utilities, etc.

You get a vote, but only a vote:  Those expenses and the dues that fund them can change, almost always increasing over time with inflation.  You as an owner get a vote at association meetings, but it is just one vote.  If the rules say a majority vote can raise monthly owner dues, then you'll have to pay them or you'll find a lien on your unit.

Periodically, you'll also find rules that allow "assessments" for major repairs, such as a new roof or parking and sidewalk work in the project.  There can also be assessments divided among owners to redo the pool or renovate the clubhouse.  Buying a unit you will have agreed to abide by the rules and pay your share of valid assessments.

That sharing of costs leads into the discussion of rules and limitations.  Let's talk first about rules for use and look of units.

Condo association rules & restrictions:  Drive into any condominium project and pay attention to the exterior of the units.  They all look the same with respect to paint colors and exterior construction and design materials; and they always will.  

You will find strict rules in the association covenants and restrictions that mandate no changing and little individuality when it comes to the exterior look of the units.

 You may find that you can't even hang a holiday wreath on your door, and you'll likely find a rule about no wind chimes.  It's all about maintaining a consistent look for the entire project.  You will likely find that there will be limitations on what type of furniture or other items you can have on an outdoor patio.

There can even be rules about how much you can individualize the interior of your unit.  These are justified by statements that the units must be in a condition to be easily sold in the marketplace.  If you paint your interior bright orange and your cabinets bright green.  Sure, if you're a hermit they may not know until you leave, but just be aware that the restrictions are both exterior and interior in many condominium projects.

I have owned a condominium, and for the most part I was happy not to have the maintenance stuff on my plate.

 However, it was a lakefront unit, and I did get really annoyed when I was told that I couldn't hang a bird feeder on my deck and that there were rules for the type of grill I could have.  They weren't fire safety rules, the were about its size and look.

Overall, condo versus single family home ownership is a personal decision, with very individual reasons for each person or family.