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There are a variety of homeownership types available to the average homebuyer in the United States. The question for new home purchasers is which of the available types of properties would best fit their specific needs.

For many first-time buyers, the decision as to which type of real estate to buy is most often based on the funds a buyer may have available for a down payment or the mortgage for which their income would qualify. And in many markets, limited funds often preclude first-time homebuyers from jumping into a single-family dwelling, which may be outside of their price range. Instead, they choose to buy a condominium, as condos tend to be more affordable options inhabiting the lower-priced real estate price continuum.

What Is a Condominium?

Legally speaking, a condominium (condo, for short) is a type of ownership in real property in which the condo unit owner holds complete title to his or her unit, plus a portion or percentage in the jointly-owned common areas that serve the condominium’s owners and residents. And the land upon which the condominium project sits is also considered a common element and thus owned by all the unit owners according to their defined ownership percentage defined by the unit(s) they own.

Technically, a condo unit owner owns (and is responsible for) everything from the inside of the drywall of the condominium unit – inward – including all the space within the condo and its attached terrace or balcony. (Almost unbelievably – condo documents can be this technical!)

Most condominium associations (also known as homeowner’s associations or HOAs) – the condominium governing body – are responsible for the unit’s drywall and inner wall plumbing and electrical works, although the specifics of who is accountable will be delineated by the following documents, which together, combine to create what is often referred to as the condo’s constitution:

  • The Declaration of Condominiuma legal document that outlines the condo’s operations and principles. The declaration is recorded in the county’s land records where the property is situated and generally defines the common elements (including limited common elements) and the unit boundaries. Included in the declaration will be the specific percentages for each unit’s overall project ownership, which is used to calculate monthly fees and voting privileges.
  • The Condo’s Bylawsdetail the condo’s operational requirements, like how many directors will fill the board, unit pet, or rental restrictions, if any. What are the legal requirements for a quorum – i.e., the absolute minimum number of board members that must be present for a board meeting to begin to conduct official business, among many other issues?
  • The Condo’s Plats – are legal documents that include site surveys and maps delineating the interior and exterior of the units and project. Plats offer legal descriptions of the property as well as accessibility (egress & ingress) authorizations.
  • Any amendments added after the condo’s initial offering.

How Are Condominiums Managed?

Condominiums are typically governed by an elected board of directors generally comprised of the owners of units within the project. The number of board members and rules for electing these condo boards is detailed in the condo’s governing documents (declaration, bylaws, etc.).

The condo board is tasked with the responsibility of managing the many moving parts of a project created by the authority defined by the homeowner’s association’s (HOA) legal documents. With the combined monthly unit owners’ fees, the condo board ensures the lawns remain manicured, and the pool chemicals are checked regularly, so residents are provided with a safe place to swim, for example. Offering preferable amenities – like a gym, or tennis courts, or a pool – are great perks, especially for those who want to own real property but do not have to be the sole person responsible for its upkeep and the cost of its maintenance.

As a condo unit owner, you are just responsible for what happens within the four walls of the defined unit.

But, like everything in life, owning a condominium has both advantages and disadvantages. Carefully consider each of the listed advantages and disadvantages of condominium ownership because this analysis will help you understand if living in a condo will work for you and your family.

The advantages of owning a condo may outweigh the noted disadvantages; however, one cannot know this until one takes the time to review the many pluses and minuses of buying a condo.

The Advantages of Condominium Ownership

  • Upkeep & Maintenance are Managed for You

    Owning a home requires maturity that allows one to understand that with the ownership comes responsibility. In addition to the fundamental yearly maintenance issues – like servicing an air-conditioning unit or furnace or clearing the gutters – there are weekly and monthly ownership responsibilities that must be followed to ensure the property remains in working order and habitable. Plus, there may be unexpected weather events like hurricanes, tornadoes, or blizzards.

    Condominium ownership won’t reduce the responsibility an owner has for their maintenance within their own unit (and its equipment), but condo owners do not typically have to worry about the project’s property maintenance, snow removal, or elevator inspections, all of which each unit owner pays with a portion of their monthly HOA maintenance dues.

    However, with authority created by taking on the management and responsibility of these common areas, the homeowner’s association can also enact rules that may restrict when the pool may be used, the time workmen are allowed to work on the property, or even the color one may paint the street number of the home, to name just a few of the potential restrictions that may be enacted.

  • Vacation & Travel Without Stress

    Preparing to go on vacation when you are a homeowner can create a list of must-dos that can be quite daunting. In addition to the typical maintenance items performed by the homeowner’s association when a unit owner is traveling, condo owners can also choose to arrange for a maintenance worker (already working on the project) to check-in on the unit while the owner is away or gather mail and packages to keep them safe. This simple gesture can provide the unit owner with a chance to lock their front door and travel with the knowledge (and most importantly, the certainty) that the property will be cared for and maintained in their absence.

    Here is a quick example, if you live in the Midwest and a tornado blows through, the clean-up and/or repairs from the aftermath will be assessed and done professionally by the homeowner’s association’s maintenance team, without the need for the unit owner to even call as a friendly reminder.

  • A Reduced-Price Tag & Lower Insurance Costs

    The fact is that condominiums tend to be more affordable than single-family homes!

    Of course, much of the inherent savings are derived from economies of scale (average cost per unit over time) in which the construction of many (rather than only one) helps reduce the price per unit when using similar resources. Plus, of course, the condo project’s multiple owners help defray the ongoing operational costs even further.

    Additionally, it is noted that insurance premiums tend to be lower when buying property insurance for condominium units (when compared to single or multi-family dwellings) because the unit’s insurance is only covering the specific unit – not the entire project or common areas. The common elements are insured through the HOA’s commercial policies (another task that the board of directors is responsible for) that are funded by each unit’s monthly condo maintenance fees.

  • Accessibility to Amenities & Transit

    As noted above, condominium ownership typically provides amenities that are generally unaffordable by the owners of a single-family property. Amenities – tennis courts, clubhouses, golf courses, shopping/pharmacy services, and even private transit – often entice buyers as these are amenities that people are often willing to pay extra for, like a gym membership or walking distance to a house of worship or park.

  • Condos Create Close Living Quarters

    The reality is that essentially sharing a larger property with others is not a great fit for every person. However, for those who prefer a community feel, a condo may be a great choice. Note, though; each condo tends to try to offer its version of a lifestyle – consider it a bit of a marketing ploy – so select a lifestyle that aligns with your own.

The Disadvantages of Condominium Ownership

Let’s review some of the more challenging parts of condo ownership.

  • Owners Must Comply with HOA Regulations

    Condo unit owners are required to follow the rules and regulations as set forth by the condo’s legal documents, which can be (and often are) amended by board members through defined and legal procedures. Homeowners who do not like to be told when and how to do something related to their home may find condo living to be challenging.

    The condo board is also responsible for creating and managing the project’s budget and budgetary decisions. Through fiscal processes, the board can increase maintenance fees when warranted. Also, to ensure a unit owner has a voice in the condo management, each unit owner must understand there is a time commitment to stay current with the board’s work and ensure one’s voice is not overlooked.

  • Homeowner’s Association (HOA) Monthly Fees

    For most homebuyers, deciding on a condo comes down to primary questions:

    • Can you live alongside neighbors in close proximity?
    • Will you use the amenities that your monthly maintenance fees cover?

    The second question is more a value proposition in which a buyer needs to determine if the monthly HOA carrying costs provide sufficient services to warrant the monthly amount. In other words, if you don’t play golf and never learned to swim, would it behoove you to pay hundreds of dollars per month for the privilege to do these things, if, in fact, you never wanted to do them in the first place?

  • Harder To Sell a Condo

    Reselling a condo can sometimes be more challenging to sell because there may be less of a pool of buyers due to specific HOA restrictions, and potential purchasers are vetted by the condo board with the authority to reject a potential buyer if warranted. Additionally, condominiums are evaluated as financial entities when applying for a mortgage so that a buyer may qualify for a mortgage, but the condo project may not. Working with a knowledgeable and qualified agent and mortgage rep is key to creating a viable future game plan for the sale.

  • Privacy? What Privacy?

    Condominiums are designed with shared common elements and even shared-walls. And while smaller, more boutique-like condo projects may offer more privacy, they tend to do so with higher price tags for this privilege. Privacy is often a game-changer for some, but others find the community-feel of a condominium project something positive rather than negative.

The Take-Away

Condominium ownership offers both pluses and minuses across many worthy levels of consideration. Yet, in the end, the final decision is always based on one’s personal preference.

Ultimately, the final decision has to do with one’s lifestyle preferences, budget, and need for control and privacy as a homeowner. And remember, not all condominium mortgages are created equal, so be sure you are speaking with a qualified mortgage professional if you have a serious interest in a condo purchase.