Condo ownership in the United States is its own distinct category of homeownership. When you buy a condo, you take title to your individual unit and become a co-owner of the building’s common areas alongside every other unit owner. You also become a member of the condo association, which is governed by an elected condo board and bound by recorded condo rules. Condo ownership is often confused with HOA ownership of a single-family home, but they are not the same thing.
Quick Answer
What Is Condo Ownership?
Condo ownership is a form of homeownership in which you hold title to your individual unit and share ownership of the building's common areas with every other owner. Condo owners pay monthly condo fees, follow the association's recorded rules and elect the condo board that manages the building and its reserve fund.
Key Takeaways
- Condo ownership in the United States gives you title to your individual unit (often described as the air space inside your walls) plus a share in the building's common areas.
- Condo association fees are not the same as HOA fees on a single-family home. Condo fees usually cover the building's exterior, common areas and shared utilities, while single-family HOA fees typically cover only neighborhood amenities and shared landscaping.
- Buying a condo involves additional steps beyond a single-family purchase, including reviewing the condo declaration, bylaws, financials and reserve study.
- Reviewing reserve fund info is one of the most important steps in any condo purchase because the reserve fund covers major repairs and replacements over the life of the building.
- Condo boards are made up of elected unit owners who manage the association's finances, set rules and hire property managers and contractors.
- Condo rules govern day-to-day life in the building, including pets, short-term rentals, noise, renovations and use of shared amenities.
- Special assessments are one-time charges levied on condo owners when the reserve fund cannot cover a needed repair or unexpected expense.
Condo Ownership in the United States
A condominium is a form of property ownership in which you hold individual title to a defined unit and share ownership of the building’s common areas with every other owner. Condo ownership in the US is governed by state law, the condo declaration recorded against the building and the bylaws and rules adopted by the condo association. For more on what makes a condo different from an apartment or a single-family home, see the difference between a condo and an apartment.
You Own the Air Space, Not the Building
Condo ownership in the US is sometimes described as owning the airspace inside your unit. The exterior walls, windows, balconies, hallways, lobbies, parking garages, elevators, mechanical rooms and roof are usually common areas owned collectively by all unit owners. What you actually own is the interior space defined by your unit boundaries, plus your share of the common areas. This is one of the largest practical differences between owning a condo and owning a single-family home.
Common Areas and Limited Common Elements
Common areas are spaces shared by every owner: lobbies, hallways, recreation rooms, mechanical rooms, the roof and the building structure. Limited common elements are common property reserved for the use of one or a small group of units, such as a balcony, parking spot or storage locker. Maintenance of limited common elements is usually shared between the owner and the association, with the split defined in the declaration.
Who Maintains What in a Condo?
Select a category to see what it usually includes.
Your Unit
Your unit is the interior space inside the unit boundaries defined in the condo declaration. The owner usually maintains everything inside those boundaries.
- Paint, flooring and interior finishes
- Cabinets, countertops and appliances
- Fixtures and outlets inside the unit
- Often, systems that serve only your unit, such as an in-unit water heater
Limited Common Elements
Limited common elements are common property reserved for the use of one unit or a small group of units. Maintenance is usually shared between the owner and the association, with the split defined in the declaration.
- Balconies and patios
- Assigned parking spaces
- Storage lockers
Common Areas
Common areas are the spaces and building components shared by every owner. The condo association maintains them, and condo fees pay for them.
- Roof, exterior walls and building structure
- Lobbies, hallways and elevators
- Mechanical rooms and shared building systems
- Parking garages and shared amenities
Responsibilities vary by building. The recorded condo declaration defines unit boundaries and who maintains each part of the property.
Condo Fees vs. HOA Fees on a Single-Family Home
Condo fees are not the same as HOA fees on a single-family home. Both involve an association that governs the community and collects assessments or dues, but condominium associations and single-family homeowners associations have different ownership structures and responsibilities.
Condo association fees usually cover the building’s exterior, the roof, the structural systems, the common areas, building insurance and water and sometimes heat, garbage, security, amenity operations and reserve fund contributions. They reflect the fact that you and your neighbors collectively own and are responsible for the entire building.
Single-family HOA fees typically cover only neighborhood amenities and shared landscaping: a community pool, a clubhouse, common parks, entry signage and shared road maintenance. The home itself, including the roof, exterior, plumbing and electrical systems, is owned and maintained by the homeowner. As a result, single-family HOA fees are usually lower than condo fees and cover much less.
What Condo Fees and Single-Family HOA Fees Typically Cover
Typical coverage by expense. Coverage varies by association.
| Expense | Condo fees | Single-family HOA fees |
|---|---|---|
| Building exterior and roof | Usually covered | Not covered (homeowner pays) |
| Structural systems | Usually covered | Not covered (homeowner pays) |
| Common areas and amenities | Usually covered | Usually covered |
| Master building insurance policy | Usually covered | Not covered (homeowner insures the home) |
| Water and some utilities | Often covered | Rarely covered |
| Shared landscaping | Usually covered | Usually covered |
| Reserve fund contributions | Usually covered | Often covered |
General guide only. The association's budget and governing documents show exactly what a specific community's fees cover.
How to Buy a Condo
Step 1: Get Pre-Approved for a Condo Loan
Most lenders treat condo loans differently from single-family loans. Depending on the loan program and lender, the condo project itself may also need to meet applicable project eligibility requirements. Get pre-approved before you start touring units so you understand how condo fees and project eligibility affect your borrowing power.
Step 2: Tour Buildings and Compare Fees
Walk through several buildings before settling on one. Pay attention to the condition of the lobby, hallways, elevators and amenities, since they say a lot about how well the building is managed. Compare condo fees relative to building age, amenities and unit size.
Step 3: Make an Offer with a Condo Review Contingency
Many condo offers in the US include a condo document review contingency, sometimes called a homeowners association document review contingency. The contingency gives you a defined number of days (typically five to ten) to review the condo documents and cancel the contract if you find a problem. For more on contingencies in general, see 8 real estate terms every first-time buyer should know.
Step 4: Review the Condo Documents
The condo documents include the recorded declaration, the bylaws, the rules and regulations, the most recent operating budget, the most recent reserve study, the last 12 to 24 months of board meeting minutes, the current insurance certificate and any pending litigation disclosure. Your real estate attorney or title company reviews the package and flags anything that should concern you, including underfunded reserves, pending special assessments, restrictive rules or financial irregularities.
Condo Document Review Checklist
Check off each condo document as you review it during the contingency period.
0 of 8 documents reviewed
For planning purposes only. Ask your agent and a real estate attorney to review the full condo document package.
Step 5: Close with Your Title Company or Attorney
Closing on a condo follows the same legal process as a single-family home. The title company or attorney records the deed, releases funds from escrow and confirms property taxes are current. For more on the process, read the closing process explained.
Reviewing Reserve Fund Info Before You Buy
The reserve fund is a savings account managed by the condo association to pay for major repairs and replacements over the life of the building. It is funded by a portion of every owner’s monthly condo fees and is held in a separate account from operating funds. Reviewing reserve fund info is one of the most important steps in any condo purchase because the strength of the reserve fund directly affects your future costs.
What a Reserve Study Tells You
A reserve study is a professional analysis that projects the association’s major expenses over the next 20 to 30 years (roof replacement, window replacement, mechanical system overhauls, parking garage repairs, elevator modernization) and recommends a contribution schedule that keeps the fund adequately funded. A healthy reserve fund tracks closely to the study’s recommendations.
Red Flags in the Reserve Fund
Watch for the following warning signs when reviewing reserve fund info:
- Reserve fund balance is well below the level recommended by the most recent reserve study
- Condo fees that have stayed flat for many years, while the building ages
- Recent or pending special assessments tied to repairs that the reserve fund should have covered
- Major upcoming projects (roof, mechanical, garage, facade) without a clear funding plan
- Litigation or insurance issues that could lead to financial obligations
Condo Boards and How They Work
Condo boards are made up of unit owners elected by their fellow owners to manage the affairs of the association. Boards are responsible for hiring property management, maintaining the building, setting and enforcing rules, preparing the annual budget and making decisions about reserve fund contributions and special assessments.
Who Sits on the Condo Board
Boards usually have three to seven directors, elected at the annual meeting. Any unit owner in good standing can run for the board. Larger buildings often hire a professional property management company to handle day-to-day operations, while smaller buildings may be self-managed by the board.
What the Board Decides
Boards approve the annual budget, set monthly condo fees, hire and oversee contractors, enforce condo rules, approve major repairs and respond to owner concerns. Major decisions, such as substantial rule changes or special assessments above a certain threshold, may require approval by a vote of all owners.
Condo Rules and Bylaws
Condo rules and bylaws govern day-to-day life in the building. Bylaws are part of the recorded governing documents and require an owner vote to change. Rules are set by the board and can usually be changed without an owner vote, although owners may request a meeting to review or repeal a rule.
Pet Rules
Pet rules vary widely. Some buildings allow no pets, others restrict pets by size or breed, and many limit the number of pets per unit. If you have a pet, confirm the rules in writing before you make an offer.
Short-Term Rental Restrictions
Many condo associations now prohibit or tightly restrict short-term rentals like Airbnb and Vrbo, often requiring a minimum lease term of 30 days, six months or one year. If you plan to rent your unit, even occasionally, confirm what is allowed before you buy.
Renovations and Alterations
Most condo associations require board approval for any renovation that affects common elements, plumbing, electrical or structural systems. Cosmetic changes inside the unit (paint, flooring, cabinetry) usually do not require approval, but the rules vary by building, and you should always check before you start work.
Special Assessments
A special assessment is a one-time charge levied on owners by the condo association when the reserve fund cannot cover a needed repair or unexpected expense. Special assessments can range from a few hundred dollars to tens of thousands of dollars per unit, depending on the project.
When Special Assessments are Issued
Special assessments are typically issued when major repairs arise sooner than expected, the reserve fund has been underfunded for years or an emergency repair (a major leak, garage damage or fire damage) requires immediate funding. They can also follow a successful lawsuit against the association or an insurance shortfall.
How to Reduce the Risk of a Special Assessment
You cannot eliminate the risk, but you can reduce it by buying into a building with a healthy reserve fund, well-maintained common areas, an engaged board and recent reserve studies that show funding tracking the recommendations. Avoid buildings with chronically low condo fees, deferred maintenance or unresolved structural and facade issues.
Special Assessment Warning Sign Check
Check each statement that is true for the condo building you are considering.
0 of 6 statements checked
- 5 to 6 statements true: Fewer warning signs. Keep reviewing the full condo documents.
- 3 to 4 statements true: Some gaps. Ask the association and your agent about each unchecked item.
- 0 to 2 statements true: Several warning signs. Get answers on reserves and repairs before you commit.
This check does not predict whether a special assessment will be issued. It flags questions to raise with the association, your agent and a real estate attorney.
Condo Ownership Terms to Know
Select a term to see its definition.
Condominium
A condominium is a form of property ownership in which you hold individual title to a defined unit and share ownership of the building's common areas with every other owner.
Condo association
A condo association is the organization of all unit owners that maintains the building, collects condo fees and enforces the governing documents.
Condo declaration
A condo declaration is the recorded legal document that creates the condominium, defines unit boundaries and sets out who maintains each part of the property.
Bylaws
Bylaws are the governing documents that set how the condo association operates, including board elections and owner votes. Changing them requires an owner vote.
Common areas
Common areas are spaces shared by every owner, such as lobbies, hallways, recreation rooms, mechanical rooms, the roof and the building structure.
Limited common elements
Limited common elements are common property reserved for the use of one unit or a small group of units, such as a balcony, parking spot or storage locker.
Condo fees
Condo fees are monthly payments owners make to the condo association to fund building operations, maintenance, insurance, some utilities and reserve contributions.
Reserve fund
A reserve fund is a savings account managed by the condo association to pay for major repairs and replacements over the life of the building.
Reserve study
A reserve study is a professional analysis that projects the association's major expenses over the next 20 to 30 years and recommends a contribution schedule.
Special assessment
A special assessment is a one-time charge levied on owners when the reserve fund cannot cover a needed repair or unexpected expense.
Condo board
A condo board is a group of unit owners elected by their fellow owners to manage the affairs of the condo association.
Condo document review contingency
A condo document review contingency is a clause in a purchase contract that gives the buyer a set number of days to review the condo documents and cancel if a problem turns up.
Buy Your Condo With REMAX
A REMAX agent who knows your local condo market can help you compare buildings, identify red flags in association documents and reserve studies and connect you with attorneys and title companies experienced in condo transactions. Whether you are buying your first condo, downsizing into one or adding a unit to your investment portfolio, your REMAX agent will help you make a confident decision. Contact a REMAX agent to get started.
FAQ
Are Condo Fees the Same as HOA Fees?
No. Condo association fees and single-family HOA fees reflect different ownership structures and responsibilities. Condo fees commonly fund building exteriors, common areas, building insurance, shared utilities and reserve contributions, while single-family HOA fees may primarily fund neighborhood amenities, landscaping and other shared community expenses. Coverage varies by community.
What Should I Look for When Buying a Condo?
When buying a condo, look beyond the unit itself to the financial and physical health of the building. Review the recorded declaration, bylaws, rules and regulations, operating budget, most recent reserve study, available board meeting minutes and pending litigation disclosures. Also pay attention to the condition of common areas and amenities.
How Do I Review Reserve Fund Info?
Review the association's reserve fund balance, most recent reserve study if available and contribution schedule. A reserve fund that is substantially below the study's recommendations may indicate increased risk of future special assessments or fee increases. Requirements and practices vary by state and association.
What Do Condo Boards Do?
Condo boards manage the association's affairs. They may set the annual budget, approve condo fees, hire and oversee property management, enforce rules and make decisions about major repairs and reserve contributions. Some decisions may require owner approval under state law or the association's governing documents.
What Are Common Condo Rules?
Common condo rules may cover pets, short-term rentals, noise, renovations, smoking, use of amenities, parking, balcony storage and visitor policies. Rules vary widely by association, so always read the current governing documents before you buy.
What Are Special Assessments?
A special assessment is a charge levied on condo owners to cover expenses that cannot be adequately funded through the association's existing budget or reserves. The amount depends on the project, the expense and the association's financial position.
Can I Rent Out My Condo?
Rental rules vary by condo association and location. Some associations allow long-term rentals but restrict or prohibit short-term rentals such as Airbnb or Vrbo. Check the association's declaration, bylaws, rules and applicable local regulations before assuming you can rent your unit.
