The condominium is similar to the townhome in that your unit constitutes a portion of a larger building. However, condominiums differ from townhomes in the way ownership is determined and the financial requirements.
Typically, when you own a condominium, you own and are responsible for your particular unit from the walls inward. You also own a percentage of the common elements such as the building, roof, walls, landscaping, pools, etc., that percentage or ownership being outlined in your Declaration of Condominium. Each condominium is different when it comes to determining your financial responsibility. Some condominiums determine ownership equally-for instance an association of 100 condominiums will each pay $500 per month. There are other associations however, that determine ownership percentage based upon square footage such as; owners of A type units of 1000 square feet will pay $500 per month, owners of a B type unit of 750 square feet will pay $375 per month and owners of a C type unit of 500 square feet will pay $250 per month. If your condominium association requires that your assessment be determined by your square footage, these figures will be outlined in the Declaration of Condominium.
An important consideration in condominium ownership is the funding of reserves for capital maintenance or improvements. Funds must be set aside, preferably in a separate account, to pay for the future replacement of roofs, painting of buildings and paving of parking lots. These improvements typically occur every 10-15 years but are a significant outlay of cash. Some higher end condominiums along the beach or in resort areas can spend close to $1 million dollars on roofs and painting every 15 years. Without proper reserve funding, a special assessment might be needed to make up the shortfall with each owner required to provide additional funding.
As stated in previous posts, always refer to your governing documents to determine your specific ownership responsibilities. In future posts we will address how to prepare a budget for condominiums and properly fund reserve items.