Michael Buckman’s Blog: The Quick & Dirty Guide to Condos
Since the turn of the century, Washington DC, has begun a trend of either building or converting properties into condominiums. These properties include former rental dwellings or large single family homes converted into to small multi-unit condominium projects. This article will look at what a condominium is and how ownership of one works. Colloquial, condominiums are also call condos and we will use that term interchangeably.
A condominium is an apartment like dwelling, townhouse or single family dwelling that is owned in fee simple by the owner. The can be townhouses with shared walls, multi-unit high or low rise buildings and garden apartments. A condo is owned by the purchaser who has fee simple or absolute ownership of the unit itself. This normally means the owner can sell, rent or will the unit outright. This type of ownership contrasts with a cooperative where you own shares in the corporation with a lease. There are some exceptions where the condo association has first right of refusal. If this is the case, then the owner is required to offer the unit at purchase price to other owners within the association before putting it at a competitive price on the market.
In addition to owning the unit itself, the owner owns a share in all common areas in the building or the community. For example, the owner of the unit may also own a share of the elevator, lobby, laundry room, roof deck, etc. Normally these common areas are owned jointly with other owners in the condo building as tenants in common. Of course like anything in life there are exceptions to these rules. Some of the services that are often offered with condos may include trash pickup, snow removal, with insurance paid for the common areas as well. Moreover, condos are real property meaning they are real estate like a house and require the owner to pay property taxes. On top of these property taxes the owner pays a condo fee for joint costs.
Condos always have an association. This association is a home owner’s association or a condo association. The members are often elected, and sit on a council or board. This board is responsible for setting new rules that are required by the condo. In some case the condo association may be run by a management company. The management company employs a property manager who is responsible for collecting condo fees and maintaining the building. Condo fees are a major factor in owning a condo.
Condo fees usually go towards the upkeep of the common areas of the building. Often condos associations have money saved up in the reserves that go towards maintaining the building as well. Other times they are used to update the building. When buying a condo, it is important to look at the reserves of a building to know if there could be an assessment. An assessment is when the condo needs to be updated and there is not enough money in the reserves, or maintenance is needed on a common element. When this occurs the owners in the condo are required to pay equally for this repair or addition. It can be very costly, so it is important to know this information. When you submit an offer on a condo and are under contract, you will be provided with the condo association documents for your review.
Condos are a great way to own real property in the DC area. It could be a strong alternative to renting. Your monthly ownership payments could turn out to be less than monthly rental payments. And property ownership helps to gain equity and improve your tax position. For more information about condo ownership contact me, Michael Buckman, Realtor with 2Michelles Realtors at Long and Foster Real Estate Inc.