Define: Condominium

A condominium, often referred to as a condo, is a type of residential property where individual units are owned by separate individuals or entities. In a condominium, owners have exclusive ownership of their individual units while also sharing ownership of common areas and facilities such as hallways, elevators, and recreational amenities. Condominiums are governed by a set of rules and regulations established by a condominium association or homeowners’ association, which is responsible for managing the common areas and enforcing the rules. Owners typically pay monthly fees to the association to cover maintenance, repairs, and other shared expenses.

A condominium, or condo, is a form of housing tenure and other real property where a specified part of a piece of real estate (usually an apartment house) is individually owned while the use of and access to common facilities in the piece, such as hallways, heating systems, elevators, and exterior areas, is executed under legal rights associated with the individual ownership and controlled by the association of owners that jointly represent ownership of the whole piece. Colloquially, the term is often used to refer to the unit itself in place of the word “apartment.”. A condominium may be simply defined as an “apartment” that the tenant “owns” as opposed to rents.

Condominium is the legal term used in the United States and in most provinces of Canada. In Australia and the Canadian province of British Columbia, it is referred to as a strata title. In Quebec, the term syndicate of co-ownership is used. In England and Wales, the equivalent is commonhold, a form of ownership introduced in 2004 and still uncommon in most places. In France, the equivalent is known as copropriété (co-ownership), and the Syndic typically oversees it.

Technically, a condominium is a collection of individual home units along with the land upon which they sit. Individual home ownership within a condominium is construed as ownership of only the air space confining the boundaries of the home (Anglo-Saxon law systems; different elsewhere). The boundaries of that space are specified by a legal document known as a declaration, filed on record with the local governing authority. Typically, these boundaries will include the drywall surrounding a room, allowing the homeowner to make some interior modifications without impacting the common area. Anything outside this boundary is held in an undivided ownership interest by a corporation established at the time of the condominium’s creation. The corporation holds this property in trust on behalf of the homeowners as a group; it may not have ownership itself.

The primary attraction to this type of ownership is the ability to obtain affordable housing in a highly desirable area that is typically beyond economic reach. Additionally, such properties benefit from having restrictions that maintain and enhance value, providing control over the blight that plagues some neighbourhoods. Major North American cities, including Miami, San Francisco, Chicago, New York City, Los Angeles, Calgary, Vancouver, and Toronto, have a lot of condo development.

Overview

Typically, a condominium consists of multi-unit dwellings (i.e., an apartment or a development) where each unit is individually owned and the common areas, such as hallways and recreational facilities, are jointly owned (usually as “tenants in common”) by all the unit owners in the building. It is also possible for condominiums to consist of single-family dwellings: so-called “detached condominiums,” where homeowners do not maintain the exteriors of the dwellings, yards, etc.; or “site condominiums,” where the owner has more control and possible ownership (as in a “whole lot” or “lot line” condominium) over the exterior appearance. These structures are preferred by some planned neighbourhoods and gated communities.

A homeowners association, consisting of all the members, manages the condominium through a board of directors elected by the membership. The same concept exists under different names depending on the jurisdiction, such as “unit title,”  “sectional title,”  “commonhold,” “strata council,” or [tenant-owner’s association],”  “body corporate,”  “Owners Corporation,”  “condominium corporation,” or “condominium association.” Another variation of this concept is the “timeshare,” although not all timeshares are condominiums and not all time shares involve actual ownership of (i.e., deeded title to) real property. Condominiums may be found in both civil law and common law legal systems, as they are purely a creation of statute.

The restrictions for condominium usage are established in a document commonly called a “Declaration of Condominium.”. Rules of governance are usually covered under a separate set of bylaws. Finally, a set of rules and regulations providing specific details of restrictions and conduct are established by the board and are more readily amendable than the declaration or bylaws. Typical rules include mandatory maintenance fees (perhaps collected monthly), pet restrictions, and colour and design choices visible from the exterior of the units. Condominiums are usually owned on a fee-simple title but can be owned in ways that other real estate can be, such as a title held in trust. In some jurisdictions, such as Ontario, Canada, or Hawaii, USA, there are “leasehold condominiums,” where the development is built on leased land.

In general, condominium unit owners can rent their home to tenants, similar to renting out other real estate, although leasing rights may be subject to conditions or restrictions set forth in the declaration (such as a rental cap for the total number of units in a community that can be leased at one time) or otherwise as permitted by local law.

Non-Residential Condominiums

Condominium ownership is also used, albeit less frequently, for non-residential land uses: offices, hotel rooms, retail shops, group housing facilities (retirement homes or dormitories), and storage. The legal structure is the same, and many of the benefits are similar; for instance, a non-profit corporation may face a lower tax liability in an office condominium than in an office rented from a taxable, for-profit company. However, the frequent turnover of commercial land uses, in particular, can make the inflexibility of condominium arrangements problematic.

United States

The first condominium law passed in the United States was in the Commonwealth of Puerto Rico in 1958. English common law tradition holds that real property ownership must involve land, whereas the French civil law tradition recognised condominium ownership as early as the 1804 Napoleonic Code; thus, it is notable that condominiums evolved in the United States via a Caribbean government with a hybrid common-civil legal system. In 1960, the first condominium in the Continental United States was built in Salt Lake City, Utah. Initially designed as a housing cooperative (Co-op), the Utah Condominium Act of 1960 made it possible for “Graystone Manor” (2730 S 1200 East) to be built as a condominium. The legal counsel for the project, Keith B. Romney, is also credited with authoring the Utah Condominium Act of 1960. Romney also played an advisory role in the creation of condominium legislation with every other legislature in the U.S. Business Week hailed Romney as the “Father of Condominiums”. He soon after formed a partnership with Don W. Pihl called “Keith Romney Associates,”  which was widely recognised throughout the 1970s as America’s preeminent condominium consulting firm.

Although often mistakenly credited with coining the term “condominium,”  Romney has always been quick to point out that it dates back to Roman times and that he merely borrowed it. Nowadays, the leadership of the industry is dominated by Community Associations Institute or CAI.

Section 234 of the 1961 National Housing Act allowed the Federal Housing Administration to insure mortgages on condominiums, leading to a vast increase in the funds available for condominiums and condominium laws in every state by 1969. Many Americans’ first widespread awareness of condominium life came not from its largest cities but from south Florida, where developers had imported the condominium concept from Puerto Rico and used it to sell thousands of inexpensive homes to retirees arriving flush with cash from the urban Northern U.S. In recent years, the residential condominium industry has been booming in all of the major metropolitan areas, such as Miami, San Francisco, Seattle, Boston, and New York. It is now in a slow-down phase. According to Richard Swerdlow, CEO of Condo.com, “You’re not going to see this giant overbuild again. It’s hard to imagine that you’d see in the next decade what we just saw. Real estate brokers and developers were in almost ticket-collecting mode. They were processing orders because there was so much business to go around. Now that sort of investor phenomenon has gone away.” He added, “That phenomenon has stopped.”

An alternative form of ownership, popular in the United States but found in other common law jurisdictions, is the “cooperative” corporation, also known as “company share” or “co-op,”  in which the building has an associated legal company and ownership of shares gives the right to a lease for the residence of a unit. Another form is leasehold or ground rent, in which a single landlord retains ownership of the land on which the building is constructed, and the lease renews in perpetuity or over a very long term, such as in a civil law emphytetic lease. Another form of civil law joint property ownership is undivided co-ownership, where the owners own a percentage of the entire property but have exclusive possession of a specific part of the property and joint possession of other parts of the property; this is distinguished from joint tenancy with right of survivorship or a tenancy in common under common law.

Ontario, Canada

In Ontario, condominiums are governed by the Condominium Act, 1998, with each development establishing a corporation to deal with day-to-day functions (maintenance, repairs, etc.). The owners of units in the development (or, in the case of a common elements condominium corporation, the owners of the common interest in the common elements) elect a board of directors at least once a year. A general meeting is held annually to deal with board elections and the appointment of an auditor (or waiving of audit). The Annual General Meeting can also address other issues, but the board and, in some cases, the owners themselves can call special meetings of the owners at any time.

In recent years, the condo industry has been booming in Canada, with dozens of new condo towers being erected each year. Toronto is the centre of this boom, with 17,000 new units being sold in 2005, more than double second-place Miami’s 7,500 units. For several years now, the city’s skyline has had a forest of cranes erecting new towers. Outside of Toronto, the most common forms of condominium have been town homes rather than high-rises, although that trend may be altered as limitations are placed on “greenfields” (see Greenfield land) developments in those areas (in turn, forcing developers to expand upward rather than outward and to consider more condominium conversions instead of new housing). Particular growth areas are in Kitchener, Waterloo, and London. In fact, after Toronto, the Golden Horseshoe Chapter of the Canadian Condominium Institute is one of that organisation’s most thriving chapters.

The Ontario Condominium Act, 1998, provides an effectively wide range of development options, including Standard, Phased, Vacant Land, Common Element and Leasehold condominiums. Certain existing condominiums can amalgamate, and existing properties can be converted to condominium (provided municipal requirements for the same are met). Accordingly, the expanded and expanding use of the condominium concept is permitting developers and municipalities to consider newer and more interesting forms of development to meet social needs.

On this issue, Ontario condominium lawyer Michael Clifton writes, “Condominium development has steadily increased in Ontario for several years. While condominiums typically represent attractive lifestyle and home-ownership alternatives for buyers, they also, importantly, introduce a new approach to community planning for home builders and municipal approval authorities in Ontario. There are opportunities for developers to be both creative and profitable in building, and municipalities to be more flexible and imaginative in planning and approving developments that will become sustainable communities.” (In A Comment about Condominiums, Community Planning and Sustainability, Forum Magazine, Dec 2006/Jan 2007, p. 28.)

India

Condominiums are more commonly known as “flats” in India. This type of housing is very common in big cities like Delhi, Mumbai (Bombay), and Chennai (Madras), but not very popular in rural India. Actually, they are registered as “co-operative housing societies” rather than condominiums in that the owners actually have a share of the co-op and not the actual real estate itself. Owners can sell the “share” in the open market, but they have to get the approval of the co-op to complete the transaction.

Singapore

In other countries, like Singapore, a condo or condominium is a housing building that has some special luxury features like swimming pools or tennis courts. Housings that don’t have such features are simply referred to as “HDB” (Housing Development Board) units, which can be possessed for rent or individually bought from the government.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 9th April 2024.