When you purchase a condominium, you have title to your individual unit in a multi-unit property, and you share ownership of the land and other common property with the other unit owners. The type of common property varies depending on the type of condominium - high rise or townhouse for example - and would include hallways, elevators, heating system, parking structures, landscaped areas, recreation areas, etc.
The difference between an "apartment" complex and condominium is legal. There is no way to differentiate a condominium from an apartment simply by looking or visiting the building. What defines a condominium is the form of ownership. The same building developed as a condominium (and sold in individual units to different owners) could actually be built at another location as an apartment building (the developers would retain ownership and rent individual units to different tenants).
A condominium is a collection of individual home units and common areas along with the land upon which they sit. Individual home ownership within a condominium is construed as ownership of only the air space confining the boundaries of the home. The boundaries of that space are specified by a legal document known as a Declaration, filed on record with the local governing authority. Typically, these boundaries will include the wall surrounding a condo, allowing the homeowner to make some interior modifications without impacting the common area. Anything outside this boundary is held in an undivided ownership interest by a corporation established at the time of the condominium’s creation. The corporation holds this property in trust on behalf of the homeowners as a group–-it may not have ownership itself.
Condominiums have conditions, covenants, and restrictions, and often additional rules that govern how the individual unit owners are to share the space. It is also possible for a condominium to consist of single-family dwellings; so-called "detached condominiums" where homeowners do not maintain the exteriors of the dwellings, yards, etc.
IS CONDO LIVING RIGHT FOR YOU?
As single family home prices rise, many consumers have been looking to condominiums as an alternative. First time buyers like the lower prices, which makes entry into the real estate ownership market easier. Seniors like the low maintenance aspect and the ability to be in a community catering to their lifestyle. Others like the security advantages that the building provides, especially for those who travel frequently.
ADVANTAGES OF CONDO OWNERSHIP
✓ protection from rent increases
✓ monthly cost can be less than renting
✓ easy financing
✓ wide range of property types, locations, sizes, amenities
✓ availability of amenities such as swimming pool, tennis courts, hot tubs, saunas, whirlpools, exercise facilities, health spas, sun decks, community rooms (the cost of which may otherwise not be affordable)
✓ you are investing in your own home and building equity
✓ appreciation of capital value
✓ pride of ownership
✓ freedom to make interior changes and enhancements to your unit
✓ enhanced security availability and peace of mind when leaving unit unattended
✓ maintenance and upkeep is kept down or eliminated
✓ security of tenure and permanent occupancy
✓ cost is often less than single family home due to efficient use of land
✓ wide range of prices depending on features, luxury and location
✓ sense of community
✓ developments available geared to a specific lifestyle (restrictions on age, pets, children etc.)
✓ participation of owners in operation of development including budgeting, decision making, determination of rules and by-laws.
DISADVANTAGES OF CONDO OWNERSHIP
✓ some loss of freedom may be experienced due to rules and by-laws e.g.. weight of pets allowed, some types of upgrades may need property management permission.
✓ due to a larger concentration of people you may experience problems with the "5 p's”, pets, parties, parking, personality and people.
✓ money is tied up in equity
✓ you may be paying for some amenities you never use
✓ boards of directors vary in terms of skill and effectiveness
NEW BUILDS V.S. RESALE CONDOS
When deciding to purchase a new or resale condominium, you will want to consider the advantages and disadvantages of both.
PROS & CONS - NEW BUILDS
✓ A lower purchase price (depending upon market conditions)
✓ A greater choice of locations within the building
✓ A broader range of options and/or upgrades
✓ Less risk of having to undergo costly, noisy and intrusive repairs and renovations
✓New home warranty protection
✓ If construction has not been completed, you cannot “see” what you are buying and must rely on artist sketches and floor plans (which may change). Be sure to have the unit’s boundaries, location, finishes, materials, chattels, etc. clearly specified in the purchase agreement
✓ Your initial deposit will be tied up for the duration of construction
✓ Financial institutions may not give you a mortgage on an unregistered condominium
✓ Construction of your unit may not be completed by the expected date
✓ You may move into your unit while construction continues in others, which can be noisy and disruptive
PROS & CONS - RESALE CONDOS
✓ You get what you see.
✓ There are no lengthy waiting periods before you can move in unless provided for in the condition of sale.
✓ Deposits are often much lower for resale purchases.
✓ You can check out the condominium “community” in advance to see if the corporation is well run, and the people who live in it are compatible with your needs and lifestyle
✓ Older condominiums sometimes have larger units
✓ Fewer options with regard to choice of unit (within the building), decorating or upgrades
✓ Older resale condominiums may require more maintenance and repairs compared to new condos.
✓ The amenities that you may find desirable (for example, a workout room, whirlpool, security features) may not be available
✓ Older resale units may not be as energy-efficient as newer units
✓ Major repairs may be coming due that will require extra charges to the unit owners if the reserve fund is underfunded.
✓ You will receive only the portion of the new home warranty that has not yet expired.