A condominium (condo) is a form of property ownership where you hold title to a specific unit—usually defined by walls, floor and ceiling—and share ownership of the building’s common elements with other unit owners. Common elements typically include land, building exterior, hallways, elevators, parking, pools and recreational facilities. A condominium owners association (COA) or homeowners association (HOA) manages those shared parts, enforces rules and collects fees for maintenance.
Unlike renting, condo ownership is a real estate title interest. In many jurisdictions that title is a fee simple interest in the unit plus an undivided fractional interest in common elements. Variations include leasehold condominiums (owner holds the unit but not the land) and structures where ownership is defined primarily by an interest in common elements. The condo’s declaration and plat (recorded documents) legally describe boundaries, ownership shares and governance.
This glossary entry is useful for first‑time buyers deciding between a house or a condo, renters comparing rental apartments to condo living, investors evaluating cash‑flow and resale risk, and international buyers learning what “condo” means in a new market. Key takeaway: you own your unit and share responsibility — and rules — with your neighbors.
A common question is “condo vs apartment.” An apartment is usually a rental unit owned by a landlord; a condo is individually owned. Apartment tenants have a lease with a single owner; condo owners hold title and are members of an association that governs shared property. Some apartments are condo conversions, and some condos are rented out by their owners, but legal ownership is the defining difference.
Co‑ops (cooperatives) are a different ownership model: rather than owning a unit, residents own shares in a corporation that owns the building and hold proprietary leases for a specific unit. Co‑op boards often have stricter approval processes and different financing considerations. Condos grant real property title to individual owners; co‑ops grant stock and a leasehold interest.
Townhouses can be owned as condos or as fee‑simple homes. A townhouse‑style condo looks like a rowhouse but shares common elements and association rules. Single‑family homes typically give full ownership of house and land without shared common elements or HOA control (unless in an HOA community). The main differences are governance (association vs none), shared maintenance and restrictions on use.
“Do I own the walls, floor, airspace condo?” You usually own the interior space within the unit boundaries—commonly the interior surfaces of walls, floors and ceilings. Structural elements, exterior walls, roof, foundations and utility chases are often common elements. Exact boundaries depend on the declaration and plat; always check the recorded drawings and definitions.
Common elements are owned collectively (hallways, elevators, landscaping, pool). Limited common elements are portions reserved for one or more units but still part of the common elements—examples: a balcony assigned to a unit, a reserved parking space or storage locker. Owners may have exclusive use rights but not exclusive ownership.
The condo declaration, recorded plat/map and unit deed define what you own. The declaration outlines unit boundaries, common elements, allocation of ownership percentages and governance rules. If anything is ambiguous, consult the recorded documents or a real estate attorney before purchase.
Monthly HOA or condo fees (dues) fund maintenance, insurance, utilities for common areas, management, landscaping, reserve contributions and amenities. Fees are typically calculated based on each unit’s percentage interest (allocation formula) or a flat schedule. Fee levels reflect building age, amenity level, staffing and local costs.
Reserve funds are savings set aside for major capital repairs (roof, elevators, repaving). A proper reserve helps avoid surprise bills. When reserves are insufficient, associations levy special assessments (one‑time charges) on owners to cover shortfalls. High frequency of special assessments or low reserve funding is a major red flag for buyers.
Owners pay property taxes and insurance for the interior of their unit (and personal contents). The association carries master insurance covering common areas and liability; owners typically must carry HO‑6 condo insurance for interior damage, personal property and deductible protection. Utilities may be split—water or gas often included in fees in some buildings, while electricity and internet usually paid by the owner.
Costs vary widely: in urban high‑amenity buildings expect higher HOA fees (sometimes several hundred to over a thousand dollars/month). Suburban low‑amenity condos often run $150–$400/month. Reserve contributions and taxes push annual carrying costs higher. For investment analysis, add HOA fees into your cash‑flow and cap‑rate calculations—high fees reduce net yield even if purchase price is attractive.
Yes — you can get a mortgage for a condo much like for a single‑family home, but lenders evaluate both the borrower and the condo project. Conventional, FHA and VA loans all have condo financing options, though program rules differ and some projects require prior lender/project approval.
Lenders often require: a minimum owner‑occupancy percentage, a maximum percentage of units owned by a single owner or investor, low HOA delinquency rates, adequate reserves and acceptable insurance coverage. Many lenders will not finance units in associations with pending lawsuits or excessive special assessments.
Down payment and rate offers depend on borrower credit and loan program. FHA loans may require project approval and limit the percentage of units financed; Fannie Mae and Freddie Mac have condo project approval and review processes. Some lenders charge slightly higher rates on condos viewed as higher risk. Ask your mortgage broker for condo‑specialist lenders and verify project approvals early.
Condo governance documents include the declaration, CC&Rs (covenants, conditions & restrictions), bylaws and rules/regulations. These documents control use of units and common elements, voting rights, meeting procedures and enforcement mechanisms. They shape daily life—noise rules, renovation protocols and common‑area use.
Associations commonly restrict pet size or breeds, short‑term rentals (Airbnb), and require architectural review/approval for renovations that affect structure or exterior appearance. Know restrictions before buying—rental bans or tight renovation rules can affect future plans and resale value.
Most associations have a formal complaint and enforcement process: notice, opportunity to cure, fines, and hearings before the board. Many states require mediation or alternative dispute resolution before lawsuits. Review the association’s enforcement procedures and history of disputes to assess governance quality.
Owners are usually responsible for interior repairs, fixtures, appliances and cosmetic upgrades unless the damage extends into common elements. Your HO‑6 insurance typically covers interior damage and liability for incidents originating in your unit.
The association handles maintenance and repair of roofs, exterior walls, landscaping, pools, elevators and other shared systems. Those costs are covered by HOA dues and reserves. The association also hires contractors and manages warranties and service contracts.
Reserve funds pay planned capital expenditures. If reserves are insufficient, the board may levy a special assessment requiring owners to pay an extra amount. Before buying, check the reserve study (recommended every few years) to see scheduled major repairs and projected funding levels.
Ask for: the declaration/plat, bylaws and CC&Rs, current budget, audited financial statements, reserve study, recent meeting minutes, insurance certificates and any pending litigation documents. These items reveal governance, financial health and upcoming expenses.
Major red flags include minimal reserve funds, more than a few percent of owners delinquent on dues, ongoing litigation (especially related to building defects), repeated special assessments, or sudden fee jumps. Any of these can signal future cost and resale problems.
Ask about planned capital projects, recent and upcoming special assessments, reserve funding policy, rental cap and investor concentration, recent rule changes, and how quickly management responds to maintenance requests. Observe common areas for cleanliness and deferred maintenance.
Condos can be more affordable per unit than single‑family homes, often in desirable locations with amenities that attract renters. Lower maintenance responsibility for exteriors and access to professional management make condos appealing for hands‑off investors.
Risks include rental restrictions or caps, high HOA fees that erode cash flow, association mismanagement or legal troubles, and narrower resale markets (some buyers avoid condos due to fees/rules). Investor returns require careful vetting of association rules and finances.
Evaluate projected gross rent, vacancy, HOA fees and operating expenses to calculate cap rate and cash‑on‑cash return. Factor HOA fees into operating expense calculations—high fees reduce net yield and can suppress resale values even if the location is strong.
The declaration (sometimes called the master deed) is the recorded document that creates the condominium. It contains unit descriptions, common element definitions, ownership percentages, allocation of expenses and initial bylaws or references to governing documents.
CC&Rs (covenants, conditions & restrictions) set owners’ obligations and use restrictions. Bylaws govern internal procedures—board composition, election processes and meeting rules. Both dictate what owners can and cannot do; they’re legally enforceable.
Watch for “as‑is” (seller won’t make repairs), “subject to HOA approval” (board could deny new owners), “no warranties” and frequent “special assessment” mentions. These phrases can indicate deferred maintenance, governance issues or buyer hurdles.
Avoid associations with reserves under recommended levels, a history of steep HOA fee increases, more than a small percentage of delinquent accounts, or repeated special assessments. These suggest cash‑flow or planning problems.
During walkthroughs and inspections, look for water stains, cracking, peeling paint, poorly maintained common areas, and HVAC or elevator problems. Request a building inspection if there are signs of systemic issues; unit inspections won’t reveal hidden structural or envelope problems.
Typically you own the interior space within unit boundaries (interior wall surfaces, floor, ceiling and the airspace inside those boundaries). Check the declaration and plat for exact definitions.
Often yes, but check the CC&Rs and rental restrictions. Some associations limit short‑term rentals or cap the number of units that can be rented at once.
Fees usually cover common area maintenance, landscaping, building insurance, management, utilities for shared services and reserve contributions for capital repairs.
Yes. Owners pay property taxes and need HO‑6 insurance for interiors. Association master insurance covers common areas. Tax deductions for mortgage interest and property taxes generally apply similar to other home ownership—consult a tax advisor.
Look at audited financial statements, reserve study, low delinquency rates, frequency of special assessments, active governance, and meeting minutes showing transparent decision‑making.
Maria buys a 2‑bed condo in a 50‑unit building. She owns her unit’s interior (flooring, cabinets, fixtures) and a fractional interest in common elements (roof, lobby, pool, parking garage). Her monthly HOA fee is $450 (covers building insurance, exterior maintenance, landscaping, water and pool upkeep). She also pays property tax, carries an HO‑6 policy and is responsible for interior repairs and appliances.
Before closing Maria reviews the declaration and plat to confirm unit boundaries, the association’s budget and the latest reserve study. She finds reserves at 30% of recommended levels and meeting minutes noting an upcoming roof project. That combination raises the risk of a near‑term special assessment. She asks the seller and association how the board plans to fund the repair.
Maria negotiates seller credits and requests disclosure of any planned assessments. She gets pre‑approval from a condo‑savvy lender who confirms the project’s eligibility for financing, orders a full unit inspection and obtains the association’s resale package. She budgets for HOA fees and a possible assessment and confirms her insurance covers condo deductibles. These steps reduce surprise costs after closing.
Work with a real estate agent experienced in condos, a lender who understands condo project approvals, a real estate attorney to review legal documents if anything looks unclear or risky, and a home inspector (and building envelope or structural specialist if you see red flags).
Sample glossary terms and resources: declaration, CC&Rs, reserve study, special assessment, master insurance, HOA.
