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What is a condo, really?

What is a condo, really?

What is a condo, really?
Are you sure you know what you’re looking at?

Which one of these do you think is a condo?

 

 

 

 

 

I suspect you answered the first one.  And you’re probably right.  However, it could also be a co-op or a rental building.  What about the second one?  That could be a condo as well, but it also might be part of a complex that is 100% rentals.  But what about the last one?  Can a single family house or duplex be a condo?  The answer might surprise you! 

Despite what most people think, you can’t actually tell if any property is a condo or not just by looking at it.  You have to look at the title for the property to know for sure. You see, the term condominium actually refers to the legal form of ownership, not the physical form of the property.  If you were to purchase an apartment-style condo you might think you’re buying the space within the walls of your apartment.  And while that’s true to a point, what you’re actually purchasing is shares in a corporation with exclusive rights to occupy and enjoy your particular unit.  In addition to your own home, you’re also buying a portion (or share) of the common property (building foyer, parkade, hallways etc).

Here’s how it works… If you look at the title for an apartment-style condo building with 50 units of equal size, you will see that the title states that each unit has 200 unit factors.  What does that mean?  Every condo building, however many residential units it has, has 10,000 unit factors that must be allocated by law to the property owners.  If there are only 4 homes, each one would be assigned 2,500 unit factors.  If there are 10, each one would be assigned 1000 unit factors.  The condo board uses the unit factors to calculate each owner’s proportionate share of the cost of running the building, such as building property taxes, utilities to heat the common areas, and also their contribution to the reserve fund for major repairs and long-term maintenance.  In some apartment-style condos, the parking spots assigned to each resident are actually set up with their own title as well.  Like the apartment itself, titled parking stalls are assigned a unit factor for operating costs and reserve fund contributions, and they’ll also be assessed property taxes separately by the city.

While the majority of condos are apartment or townhome style, it is possible for single family homes to be a condo.  Frequently these are gated communities, with each home situated on its own lot, and sharing no walls with other homes.  The condo unit in this case is the land itself.  That’s why this type of property is referred to as bare-land condo.  Each lot is assigned a unit factor, and the costs to maintain the common property are apportioned to each owner based on its unit factor, just like in an apartment-style condo.  The difference here is that the shared costs most often refer to items such as the road leading through the complex, the fence or gate surrounding it, green spaces, and any structures such as fitness facilities or community centers.  Every homeowner owns a portion of the land on which the entire complex sits, and the condo fees generally cover snow removal, lawn care and maintenance of the roadways. 

The bottom line is, you simply can’t know for sure what the legal form of ownership for any property is just by looking at it.  That pretty half-duplex may or may not be a condo.  That brand new house might be part of a bare-land condo complex.  The good news is, these are all questions your real estate agent can answer with a bit of research.  If you’re curious about any home you see, please reach out anytime!  We’re happy to get you the info you need!

– Kathy Schmidt, Broker Owner, Schmidt Realty Group Inc.

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