Buyers looking for a place to call home often find condo living offers the lifestyle they seek. Aside from being an affordable option, owning a condo also comes with great amenities and community appeal that don't typically come with homes in other neighbourhoods. Before buying a condo, home seekers need to know exactly what they own and what they don't before signing their name on the dotted line. This way, there is no confusion or surprise regarding rights and responsibilities once the home is purchased. Read on to learn about what homebuyers own when they buy a condo.
Why Choose a Condo?
For many people, the decision of whether to buy a condo or a single-family home comes down to lifestyle and budget. Condos are often more affordable than single-family homes, especially in major metropolitan areas where real estate prices are high. In addition, condos require less maintenance than single-family homes, which can be appealing for homeowners who are busy or otherwise can't complete maintenance tasks on their own. Another advantage of condos is that they often have amenities such as swimming pools and fitness centers that are not available in most single-family home neighbourhoods.
Of course, the trade-off with condos is that homeowners may not own the entirety of their condo. While they own most of it, there will be exceptions that homebuyers need to know before purchasing a condo.
Freehold Condominiums: How They Differ From Other Condos
In traditional condos, a third party handles all the maintenance and repairs, which many buyers find appealing. Freehold condominiums work a little differently. Like conventional condos, owners of freehold condos own their unit, but they also own the land it's built on. This means, in addition to the unit itself, they also have ownership of some exterior elements as well. Responsibilities include care and maintenance of the entire property, such as the roof, outside walls, lawn, driveway, and garage.
The home structure itself can vary—the home may be a high-rise, low-rise, townhouse/rowhouse, duplex, triplex, single-family home, or even vacant land. People purchasing condos often believe the community association maintains their outdoor areas since they pay fees to this entity, but the same responsibilities may not align with "traditional" condo ownership. It's vital to read all the bylaws to get a thorough understanding of what's being purchased.
What is Common Property?
A professional surveyor typically prepares a site plan, and these documents offer a wealth of information to give potential owners all of the vital information they'll need before finalizing their purchase. In addition to paying for their own expenses relating to ownership, owners must also pay for common area maintenance in the form of community association fees or reserve funds. In general, common property elements include:
- Recreational facilities
- Exterior doors and windows (unless otherwise stated in the contract)
Other common property areas may include structural elements, mechanical services, and electrical services. Additionally, areas used solely by the owner and not other residents may also be considered common property (e.g. parking spaces and balconies). Always read documents thoroughly, as common properties can vary based on how a complex is structured because, in some cases, areas that owners assume they own may not be their responsibility.
Fees in condo complexes are sometimes adjusted to reflect changing costs or if the reserve fund gets too low, which is a financial obligation traditional houses don't have to pay. The community association's annual budget will usually describe these expenses and reasons for increasing fees in detail.
How to Learn Exactly What You Own
It can be confusing for owners of condos to understand exactly what they own. This is why it's so important to gain a full understanding of how the legal ownership of condos works because the actual expenses involved may not align with what was expected to pay. Reading key documents and learning their intricacies can make things clearer.
A declaration offers fundamental information about how condos are organized and operated, outlining exactly how owners are expected to contribute to the upkeep of common expenses. It may also include rules associated with pets, home-based businesses, or other regulations related to being a member of the association. The rules contained within the declaration are usually well-set and difficult to change. Before buying, home seekers should read this document carefully to ensure they don't have objections and are willing to abide by all rules.
The condominium's plan also illuminates essential information for potential owners. It's a good idea to carefully examine the unit boundary to determine where one's unit ends and the common property begins—this also highlights areas owners are responsible for maintaining. A professional surveyor can help clear up any questions in determining who owns what.
Understanding how a unit factor works is also a consideration. Also known as "proportionate share" or "percentage of ownership," a unit factor outlines how much of the condo's common property is owned by homeowners. This is important because it ultimately determines how much each owner is responsible for in fees and the level of voting rights they possess in the community. The unit factor can be found listed within the condominium's governing documents.
Why It's All Important
Condominium bylaws are the governing documents for the community. Owners who break the rules or do not follow through on their ownership responsibilities can be held accountable, creating significant legal problems. Understanding precisely what is involved with a purchase before making the investment can prevent misunderstandings and eliminate issues down the road.
Owners have specific responsibilities for condo maintenance and insurance of each element of the complex. For instance, if condo fees aren't paid to cover these expenses, the condo association can pursue action. This can mean more debt being added to a mortgage, filing a caveat against the unit owner's title, restricting voter rights, charging excessive interest on the amount owed, pursuing legal court action, or even foreclosure.
Is the Condo Lifestyle Right for You?
Many owners find condo living to be a perfect choice. With a strong sense of community and structured rules to live by, it can make for an easy lifestyle. However, as with any large purchase, it's important to understand the ins and outs of buying a condo, especially when it comes to ownership. This way, home seekers can make an informed decision as to whether buying a condo versus a home is the right choice for them.