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Condos are a very different type of dwelling from apartments and houses. A condo can offer many of the benefits of homeownership without all of the responsibilities. In this post, we’ll explain more about how condos work.
A condominium, or condo, is a form of housing where a specified unit of a piece of real estate is individually owned while the association of owners controls and collectively owns the whole piece. The condo association owns the common areas, such as the hallways, elevators, pool, and other exterior areas, but individual unit owners have use and access of these facilities. Condo ownership is usually defined as owning the area inside the exterior walls confining the home. Everything outside of these walls belongs to the homeowners as a group.
A homeowners association (HOA) or a condo association that consists of all the individual unit owners manages the condo through a board of directors. The board is elected by the membership. As an owner in a complex, you will pay monthly dues or fees to the condo association. These fees will go toward insuring and maintaining the property. The hallmark of a good condo association is its reserve budget. The larger the budget of the condo association, the less likely you are to be charged assessments, which are expenses assessed to the unit owners when the condo association has insufficient funds.
When you buy a condo, you own only part of the property, and you have elected to become part of a community. Signing a contract to purchase a condo means that you have become part of a “real covenant” that governs the complex. In other words, you agree to abide by all covenants, conditions, and restrictions (CCRs) outlined by the HOA or condo association. Failure to comply with these rules could result in the termination of your ownership. Condos are similar to apartments in that you are either prohibited or severely restricted in your ability to renovate or remodel the property. Any changes you want to make will have to be approved by the HOA.
The condo association has a master insurance policy that covers damages to the exterior structure of the building and common areas. Individual unit owners are responsible for insuring the interior structure and contents of their property. For instance, water damage to your living room walls would not be covered by your condo association’s policy. When taking out a condo insurance policy, you must insure all structures within the exterior walls of your home in addition to your personal belongings.
