What Is Condominium Ownership?
Most people tend to think of “condominiums” as a type of attached housing, usually in the form of stacked flats. But the term actually refers to a type of legal property ownership rather the type of housing product. In fact, detached homes and townhomes can also be a condominium as it relates to the ownership structure.
In the typical ownership of a detached home, the homeowner owns the lot and house structure with no others on title. In a condominium ownership, the homeowner will own a “share” of all the land and all the structures, with the rights to occupy a specified airspace – the home within which they live. As example, let’s say that a townhome project of 100 homes sits on 10 acres of total land. The homeowner will own 1/100th of all the land and structures along with the other 99 homeowners. Through an HOA, the 100 homeowners pay dues that go towards site maintenance, structure reserves, and other operational costs. Thus, the 100 homeowners in the HOA are collectively responsible for repairs to the land and structure.
In many cases, the condominium ownership had to do with the city requirements during the initial stages of the development’s entitlements. In the case of detached condominiums, which probably have a minimal lot size, the city probably did not have zoning standards that would permit the single lot home ownership. And especially with stacked flat units, it would not be possible to designate who owns the land under multiple parcels. Thus, it is very common to create condominium ownership where all homeowners own a share of everything, with the rights to occupy a specified home.
Also keep in mind that you will hear the term “fee ownership”. This term applies both single lot and condominium ownership, meaning that the homeowner has ownership of the land and structures in some form. One alternative to fee ownership could be a leasehold interest, where the homeowner has rights to lease the property from the fee owner, usually in some long-term manner.
As always, we welcome your comments and questions below.