What is a Condo?
When considering purchasing a home in a multi-family community or complex, there are several kinds to choose from. The CONDOMINIUM, the PUD and the CO-OP are explained below.
Condominiums are either new construction or resale but the form of ownership is always fee simple. In many ways, it is similar to owning a single family home since you own all the space inside the “four walls” of your unit as well as the plumbing, electrical fixtures and other equipment and appliances that are within your unit.
Unlike a single family home, the areas outside your unit’s “four walls” are either limited common areas or common areas. Limited common areas are usually decks, patios or parking spaces and storage units that only you have the right
to use during your ownership but are maintained by the Home Owners Association which is commonly referred to as the HOA. Generally speaking, your neighbors are not supposed to use your limited common areas without your permission. Common areas are normally used by all homeowners and are also maintained by the HOA. The specific use of both types of areas are governed by the rules and regulations of the association.
Everyone who owns a unit in the condominium is automatically a member of the HOA. Each member has 1 vote per unit owned which is usually “weighted” by their percentage of common ownership. The size, height, view, etc., are some of the ways that your percentage is determined. For instance, a 1 bedroom unit on the first floor may have a .75% of common ownership while a 3 bedroom unit on the top floor with a lake view may have a 1.85% common ownership. Not only do these percentages hold weight in elections that come up from time to time but, should there ever be a special assessment, the amount you would be responsible for paying would be pegged to this number. (back to top)
Some people prefer to live in a planned community with certain exterior areas maintained, ie: driveways, snow removal, possible amenities such as pool, playground, etc., but still maintain a “single family home” lifestyle. These homes are usually referred to as Planned Unit Developments or PUDs. They are not technically condominiums but do share some important similarities with them.
A PUD owner retains fee simple ownership of the building and land as shown on its plat map while paying dues for the upkeep of the shared common areas much like in a condominium. Owners of a PUD are responsible for the exterior
maintenance of their homes such as painting, window replacement and roof repair to name a few. Generally, there are rules and regulations (CC & Rs) that govern the look, color scheme, roofing materials, etc., to give a uniform appearance to the complex. Each homeowner is also a voting member in the non-profit corporation that oversees the common areas. (back to top)
Although the CO-OP (or cooperative) form of ownership is not very common in this area, there are still several in the Seattle area - most dating back to WWII or earlier. In many ways, a CO-OP seems to operate like a condominium but is a very different form of ownership. A condominium has each unit owned, fee simple, by a different person. The monthly dues cover the individual unit’s share of expenses for the maintenance of the common areas and management fees, if any.
In a co-op, the entire complex is owned by one entity as a corporation and the individual units are “owned” in the form of owning shares in the corporation. Because one entity owns the corporation (the co-op), they may have a mortgage on the premises. When you buy into a co-op, you may pay less for the unit than if it were an equivalent condominium but your monthly dues (maintenance fee) are roughly double that of the condo. This is because you are paying for the
maintenance of the common areas, etc. like a condo but also your unit’s share of the monthly mortgage payment that the corporation has on the property. As time goes on, this mortgage is paid off and the owners are only responsible for
similar costs to that of the condo.
One benefit of this higher monthly maintenance is that the unit owners can deduct the portion of their maintenance that goes towards the corporation’s mortgage payment. The rules and regulations in a co-op are also much more restrictive. In a condo, you can sell to whomever you choose, paint your interior walls any color you like and you can rent to whomever you want as per the condos CC & Rs. In a co-op, their “Co-op Board” regulates everything about your use of the property including whom you sell to, what their line of work is, what they earn (even if they can get a mortgage!). The Board can define anything other than protected class or discrimination items. Although many co-op owners get along very well and have no problems with these issues, the very nature of a co-op allows for this restrictive behavior. (back to top)