Condominiums: Overview

Generally, a condominium is an estate in real property ownership representing a combination of a separate or exclusive ownership in the condominium unit and the undivided ownership interest in common with others in the common elements.


Generally, the condominium unit is made up of the airspace as enclosed by the floor, walls and ceiling and is owned exclusively by the unit owner. The common elements are the interests owned by all unit holders in the land, foundations, walls, floors, ceilings, halls, heating and utility systems, recreational facilities and the real property on which the unit sits. These common elements may be general, such as the swimming pool or hallways, or limited and its use restricted to specific owners (e.g. parking spaces or patios attached to the individual unit). The laws of most states provide that ownership of an airspace unit cannot be separated or partitioned from the percentage ownership in the common elements assigned to that unit. The estates in condominiums are generally held as Fee, wherein title is vested fee simple to the unit owner with an undivided interest as tenants in common with other unit holders to the common area, or leasehold, wherein the individual unit owner has the exclusive right to possession of the unit and an undivided right of possession to the general common elements. The interests created by a condominium project must conform to all statutory requirements creating condominium estates for that particular state.


A condominium is typically created by the following


1)  condominium declaration,

2)  condominium map;


The condominium declaration must be statutorily created by the developer of the project to conform to that state’s Condominium laws and should specify whether ownership will vest fee simple or leasehold, the designation of limited common elements, a statement of the rights and obligations of the unit owners, and a legal description of the property. The condominium map identifies the location of each unit and its general and limited common elements. The map must provide a three-dimension drawing showing the boundaries of each airspace unit-length, width, and height.


The condominium owner’s association is generally a non-profit corporation made up of unit owners whose responsibilities typically include the maintenance of the project, grounds, and common areas, as well as the assessment and collection of association dues, which are collected for that purpose. Under the declaration, the association may be given special rights or interests such as the right of first refusal to purchase any unit being sold or transferred, or an easement for maintenance of the individual unit.


The declaration will usually provide an institutional lender first lien priority over condominium assessments, but only as to those fees assessed after the mortgage. Should the unit owner not pay this portion of the assessments, the declaration or statutory law will generally provide that the association may secure payment for assessments by recording a lien against the owner’s individual unit in the county records. In some jurisdictions, the association may not be required to file a lien in the county records for unpaid assessments and statutorily, non-payment of assessments will automatically constitute a lien on the unit. Should the association choose to pursue the collection of this lien, they may initiate foreclosure proceedings. Therefore, when insuring condominiums, it is essential that the agent obtain verification that all assessments have been brought current and there are no interests (such as rights of first refusal) adverse to our insured.


At some point in the out-sale process the developer will relinquish control of the condominium project to the association, or this may occur automatically by statute. After this point, the ability of the developer to correct errors in the map or other documents is minimized or eliminated and the association itself will be considered the authorized party. Questions in this regard must be directed to Agents National Title Counsel.