When you think of condos you probably picture a 1-2 bedroom apartment-type property with monthly dues. That is not incorrect, but like every square is a rectangle not every rectangle is a square. Condominium refers to the ownership structure of the real estate.
Condominium (“condo) ownership involves fee simple ownership of individual units of an overall property where common areas are owned in common and paid for through monthly dues. Many definitions focus on residential condo ownership; using operative words such as “dwelling” units. While there are vastly more residential condominiums, each asset class of real estate can be owned in condominium form, even land.
Typically, square footage (percentage of ownership of the overall project) dictates voting rights. For example, if one owner of an industrial condo project owned 51,000 SF of a 100,000 SF project they would have 51% voting rights, which could overrule the other owners combined. Condo fees are also based on percentage ownership and can be expressed in per square foot terms. Because common areas are shared, depending on the asset type, condo units may have a core factor which contributes to discrepancies with County records.
Upon creation, condominiums create bylaws, which contain conditions, covenants, and restrictions that govern the common ownership of the overall property. These bylaws are enforced and administered by an association of elected directors and can include covenants which restrict certain otherwise legal uses. For example, many industrial condos prohibit automotive uses regardless of whether the use is permitted by right under the property’s zoning.
The importance of a competent, effective condominium association cannot be understated. Its stewardship of the funds appropriated from association dues is critical. Condo areas must be upkept while maintaining adequate reserves for repairs or renovations. In addition, it is in the interests of all the owners for condo dues to remain as low as possible.