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| Real Estate - Condominium or Fee Simple Ownership |
Generally, apartment-style buildings are called condos,
two-story row houses are known as town homes, and free-standing
homes on small lots are referred to as garden homes.
Unfortunately, this description creates some confusion about
real estate ownership. Apartment, town home, and garden home
describe the design or construction of certain homes. The word
"condominium" does not refer to a the layout or style of a
building. Condominium is a form of ownership of real estate. The
form of ownership of real estate cannot be recognized by
observing the building design.
Condominium Regime The legal definition of condominium is: the
absolute ownership of a unit based on a legal description of the
airspace the unit actually occupies, plus an undivided interest
in the ownership of the common elements, which are owned jointly
with the other condominium unit owners. Each unit owner of a
condominium has individual title to the space inside his unit.
The space is sometimes described as beginning with "the paint on
the walls." In addition, each unit owner has an undivided
interest in the physical components of the condominium buildings
and land.
A popular type of condominium development is the multi-story
apartment. In this case, there is no land under each unit. In
these developments, the condo association usually handles
maintenance of the building exterior and common grounds, while
the unit owners maintain the interiors of their units. A
condominium association is selected to make decisions about
expenditures for repairs, and to handle administrative work
related to the common areas. Fees are collected from the unit
owners to pay for common maintenance. The association normally
holds an insurance policy covering the jointly-owned areas,
while individual owners carry insurance for the interior
components of their units. Condo projects may resemble
duplexes, town homes, garden homes, or residences on |
regular
lots. In general, the creation of a condo regime allows the
developer to get more density approved than would be allowed if
he had done single-ownership lots. This is often the reason why
the condo regime is chosen instead of a development with single
ownership lots. A condominium may be built as two units of a
duplex. In this case, the two owners may jointly make decisions
concerning maintenance of any common areas. By setting up the
units of a duplex as two condos, the owner is able to sell them
to two different owners.
Each condominium has rules that are specific to the development,
so no assumptions should be made about their requirements. It is
important to read the condominium documents carefully before
purchasing a condo. The documents specify the maintenance that
is covered by the common budget. In one project, the association
may handle exterior components, decks, pools, sidewalks and
driveways. In another, the individual owners may be responsible
for more maintenance of their units, including foundations,
roofs, and exterior walls.
If you have questions about the division of labor between the
common budget and the individual owners of a condominium, you
can present your question to the condo board itself. The board
can give you an interpretation of the rules and clarify how the
issue has been handled in the past. Another possibility is to
ask a real estate attorney to review the documents for you.
Realtors, other unit owners, or maintenance workers are not
appropriate or reliable sources for the interpretation of condo
documents.
The Texas real estate contract for condominiums contains a
provision requiring that the buyer be given a copy of the condo
documents, with a period of time to review them. During the
document-review period, the buyer may terminate the contract
without penalty. In addition, a resale certificate is must be
provided by the association |
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president or manager. This document
provides information on the current budgets, insurance coverage,
special assessments, lawsuits and other matters that affect the
association.
Fee Simple Ownership
In contrast to the condominium regime, you may own real estate
by fee simple. "Fee", which comes from the word, "fiefdom",
refers to legal rights in land, and "simple" means
unconstrained. Fee simple is the most common type of ownership.
It is the absolute legal title to real property, including both
buildings and land. In fee simple, there are several different
possibilities with regard to your obligations of ownership:
(a) Your property may not be in a subdivision at all. In this
case, your deed will not include any subdivision restrictions
that control your use of the property. Be aware that there could
be some deed restrictions put in place by previous owners. In
addition to deed restrictions, you may be governed by city or
county ordinances or zoning laws that limit your use of the
property.
(b) Your property may be in a subdivision with very few
restrictions, no common areas, no architectural control
committee, and no mandatory dues. Usually these are older
subdivisions.
(c) Your property may be in a subdivision of homes on large
lots, or in a town home or garden-home community in which there
is a legally created homeowners association. In this case, every
homeowner is required to be a member of the association. The
association may charge mandatory dues and enforce subdivision
rules. A certain level of maintenance may be required of each
property owner. For example, you may need association approval
of exterior paint colors, fences, or additions to your home.
Like the condominium form of ownership, fee simple ownership
does not prescribe how maintenance is handled or how
developments are governed. For example, the owners of a town
house, with fee |
simple ownership, may be required to fully
maintain their units. Or, the owners' association may cover
painting, roofing and yard work for the owners. In subdivisions
where there are single family homes on large lots, it is more
common for the homeowners association to manage the common
grounds, pools and parks, while the individual lot owners fully
maintain their own properties. Understand your ownership rights
and obligations
Before buying into a condominium regime or purchasing a fee
simple property, you should have a clear understanding of the
type of ownership you will have in your property. If you are
buying a condominium, it would be wise to read the condo
documents carefully and understand how maintenance is divided
between the individual owners and the condominium association.
If your ownership is fee simple, with individual ownership of
the land, you should review the deed restrictions (if there are
any) and understand the restrictions and obligations that apply
to your property. In the fee simple form of ownership, there may
be mandatory dues to pay for common area maintenance, or, in
some cases, the dues may be used for partial maintenance of the
individual properties.
If you have a question about your type of ownership or about
your obligations as a homeowner, it would be wise to review the
title documents with a real estate attorney before proceeding
with your purchase. Ask plenty of questions! A clear
understanding of your type of ownership, and of your obligations
as a homeowner will result in a more satisfying real estate
purchase.
About the author:
Roselind Hejl, CRS, is a Realtor with Coldwell Banker United in
Austin, Texas. Her website - http://www.weloveaustin.com - offers a
wealth of knowledge about the City of Austin, homes for sale,
real estate market trends and buying and selling tips.
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