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What is a Condominium?

Older apartment buildings are often converted into condos.
A condo lease agreement.
Owning a condo-style townhouse may be cheaper than owning a single-family home.
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  • Written By: Michael Pollick
  • Edited By: Lindsay D.
  • Last Modified Date: 22 November 2014
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A condominium is a form of home ownership in which individual units of a larger complex are sold, not rented. These units may be renovated apartments, townhouses or even commercial warehouses. Any multi-unit structure can 'go condominium', meaning occupants must either vacate the premises or purchase their apartments outright.

Those who purchase units in a condo technically own everything from their walls inward. All of the individual homeowners have shared rights to most common areas, such as the elevators, hallways, pools and club houses. Maintenance of these areas becomes the responsibility of an association. Every owner owns a share of interest in the association, plus an obligation to pay monthly dues or special assessment fees for larger maintenance problems.

A condominium arrangement is not the best option for every potential homeowner. There can be a noticeable lack of privacy in the common areas — the pool must be shared with every other owner, for example. Those who would prefer to own all of their amenities and maintain their own lawn and garden may want to pursue single home ownership options instead. It can also be more difficult to sell a condo unit as opposed to a home with acreage. Condo owners only own their units, not the ground beneath them.

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Those who may benefit the most from condominium living are veteran apartment renters who don't mind having close neighbors. Others may not want to be bothered with external maintenance or the responsibility of lawn care. The overall price of a condo-style townhouse may be much lower than an equivalent single-unit home. Buying a unit does allow equity to build, unlike paying monthly rent in an apartment complex.

One thing to be aware of when living in a condominium setting is the political reality of an owners' association. Decisions may be made in monthly meetings which will cost individual owners more money, but not necessarily deliver equal benefits for all. It can be nearly impossible to avoid being affected by at least one condo board decision, so active participation in meetings and discussions may be more compulsory than you might expect. Condo living may be more advantageous financially than apartment rentals, but it does require more active participation in community events.

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Discuss this Article

anon349386
Post 9

I have a green card to live in the U.S. I want to buy a house. Is it possible for me to buy a house if it is a condo?

anon199562
Post 5

I and my wife live in an apartment which has 64 apartments. I wanted to install Split Air Conditioner on the external wall of my own apartment. The Association wanted me to install an air-conditioner inside my balcony, but neccessarily I left the wiring and ducting outside the external wall of my apartment which does not affect the functioning of other apartment holders. Even at this the apartment owner is objecting to and wants the Association to collect charges on a periodic basis. Is this justifiable?

anon189154
Post 4

i need to ask what do i as a resident do in case of the association delegating a part of the lawn for aggressive football played by kids above 14 years of age?

sambasivarao
Post 3

how to collect the maintenance charges from different flats of 1/2/3 bed room of different plinth areas with different corporation taxes and different values of the individual registered flats in one condominium as per law in India.

anon8096
Post 2

"Flat" refers to the type of property, i.e. not a house. It can be custom-built as part of a "block of flats" or can be a conversion where a large house is subdivided into two or more self-contained units. The term "flat" has nothing to do with the form of legal ownership of the unit. It is merely a physical description of the type of property

The American term "condominium" is not used in The UK. The British equivalent is known as owning a "share of freehold". Not uncommon in Victorian-era blocks of flats, from the early 20th century onward this has become an extremely rare form of ownership in the UK. Most flats are on a 99 or 125 lease. The "owners" only own the inside of their flats and the freeholder owns the communal areas and the building itself.

Despite this, the flat "owners" a.k.a. leaseholders must pay an often hefty monthly service charge to the freeholder for the maintenance of communal areas and the exterior of the building.

It is unusual for a mortgage to be granted on a flat with less than 65 or 70 years remaining on the lease. In such circumstances the flat "owner" who wishes to sell must pay often tens of thousands of Pounds to the freeholder to extend the lease back up to a high enough number of years to satisfy the financial institution offering a mortgage to the buyer.

Technically, once the lease expires, ownership of the flat reverts to the freeholder. In practice this hardly ever happens as leases are granted for longer than the average human lifespan and a living freeholder usually prefers cash now for a lease extension over eventual ownership of the flat reverting to their perhaps yet unborn great-grandchild.

A flat may be lived in by the leaseholder or rented out by the leaseholder to a tenant.

Most British people think that their word "flat" is interchangeable with the American term "apartment". However, if the American term "apartment" denotes rental occupancy only, i.e. you own a condo but can only rent an apartment, then this is not the case.

anon7438
Post 1

When the British or other Europeans use the term "flat" are they referring to a condominium as this article defines it? Or are they referring to an apartment?

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