Monday, March 10, 2014

Will You Know A Condominium When You See One?

Millions of families throughout much of the world now live in condominiums, and, as Americans pull out of recession, we likely will see this unique form of real property ownership continue to grow. The legal “device” known as a “condominium” provides a multitude of real property ownership opportunities.   

What, exactly, is a condominium?
A:        You cannot recognize a condominium or a condominium unit by sight, touch, smell or even use.  For example, a “condominium” might appear to be a duplex, a single family home development, an attached row, ranch, or town home, an apartment building or complex, an industrial park, a commercial office building or even an entire community. Condominiums may include residential housing, shopping centers, churches, schools, stables and even jails. You can’t fully tell what a condominium is by its Latin meaning (“joint dominion”) but aspects of that definition are key to condominium ownership and living. Technically, a condominium is any developed real property that has been “subjected to” a state’s statutes (written laws) allowing condominium development. 

Q:       How do the condominium statutes work?
A:        Condominium statutes vary from state to state. In Ohio, they allow a developer who meets certain requirements and takes certain legal steps to lawfully divide a piece of (usually already developed) real property into parcels of space that can be separately owned. Each parcel of space has all of the essential legal attributes of any other separate parcel of real property. This means that each can be separately owned, conveyed, taxed, mortgaged, liened, bequeathed and inherited. For people who want to own their own property, have their own mortgage(s), (hopefully) enjoy the benefit of increasing property values and other attributes of real property ownership, condominium units expand real property ownership options.

Q:       Can space be considered real property?    
A:        The “space as real property” concept is not part of our real property law heritage, which was derived from English property law. In fact, without the condominium statutes, the space constituting a tenth floor apartment, for example, could not be treated as a separate piece of real property. Ohio’s “enabling” condominium statutes, however, allow such space to become real property.     

Q:       What happens to the part of the property that is not included in the “space”?
A:        When a piece of real property becomes a condominium by using a state’s condominium statutes, the property is divided generally into “units” and “common elements.” In most condominiums a unit is simply a cubicle of space that may include various items, such as floors, ceilings, windows and doors, which a state statute or a drafter of condominium “governing documents” may provide. 
            All other parts of a “typical” condominium property that are not defined as a part of a unit (including, in Ohio, the underlying land) are common elements.  These common elements are not considered separate parcels of real property. Rather, an “undivided” portion or percentage of the common elements is allocated to (and owned by) each unit as “an appurtenance” —a part of the legal title—to that unit.  So, if you buy a condominium unit, you also will own an “undivided” portion of the condominium’s common elements.  For instance, your portion of the condominium’s common elements might be one-tenth in a ten-unit condominium, even though your portion cannot be physically identified, and will always remain unidentified and unidentifiable!

Q:       So, if I say I’m buying a condominium, I’m really only buying a share in a condominium. Is that right?
A:        Yes. Although most people, including many of those in the real estate industry, talk and write about buying and selling “condominiums,” they really mean they are buying and selling UNITS in a condominium.

This “Law You Can Use” consumer legal information column was provided by the Ohio State Bar Association. It was originally prepared by Columbus attorney Dick Loveland, and updated by attorney Bill Loveland of Loveland Law, LLC, Upper Arlington, Ohio. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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