A Condominium – What Is It?
Condominium refers to a form of ownership in which you own and hold title to the interior of a specific residence. For example, you own the interior of a condo apartment, including the floor and the indoor face of the walls which you are free to carpet or paint or wallpaper as you wish. The condo association owns the roof and the exterior walls, the plumbing and wiring inside those walls, the sidewalk and shrubs outside plus any common facilities such as the gym or the pool. Your condo documents will detail exactly what you own and therefore are responsible for repairing versus what the association owns and must maintain.
You belong to the condo association as a unit owner and own a fraction of those common facilities. Each owner is assessed a condominium fee which is also called a maintenance fee and is usually paid monthly. It pays for the upkeep of common areas, pool management and lifeguards, property taxes, insurance premiums owed on the common areas and usually the services of a property manager who keeps it all running smoothly. In fact, give the condo some bonus points for hiring a professional property manager to manage a big property.
Pay close attention to association fees when you’re weighing the purchase of a condo. The same is true of homeowners’ associations where you own your home and yard completely but pay into a pool to manage common neighborhood areas. They can be hefty, especially if the development boasts a lot of common-area features such as pools, gyms, playgrounds, tennis courts, clubhouses or full-time security people. And there’s no limit on how high your fees might rise over the years. While you could lock down your mortgage payment for three decades with a low-interest mortgage, your association fee could ratchet higher year after year. And if your association does not manage its money carefully, you can be hit with special assessments to pay for big repairs. Unlike your mortgage interest, condo and homeowner association fees are not tax-deductible.