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In regards to purchasing a condo or townhome that has a HOA, I heard that we only own 0.01 arches when it comes to owning the land portion and per what I have heard, this basically means that this really is just a corner of a living room….*confused..*
‘If’we don't own anything in regards to the land portion, then who does? The HOA or the builder? In case of an earthquake or whatever reason the building goes down, will the 'real' land owners, whoever that is get to take away the land and rebuild something else and hence we wouldn't not own anything at all if the building is gone? Can I rebuild my condo unit in case the building is gone in these situations? I would think the HOA would need to get involved....? so sorry for our inexperienced questions. Anyone had similar questions who lives in a townhome/condo?
Second question is, I heard that 20% of whatever percentage of homeowners that are allowed to rent out their units only applies to those who purchased the units as an investment property. What if I live here for 2-5 years and move out, rent it out, would that be a ok? I know different HOA is different, but was wondering if you have any similar experience in general to share. Thanks for sharing.
Just read your questions and will try to answer as best as I can...when you're looking at condos to buy make sure you understand whether it is a straight condo or a co-op...I found a good definition of both of them (plus townhomes) to help explain it better than I can: Condos, Townhomes, Cooperatives: Hybrid Ownership
How they differ
Real estate titles to condominiums, townhouses, and cooperatives are described as hybrid forms of ownership because they include real estate elements that are owned by individuals and elements that are owned by a group.
The following explanations will help you sort out the differences and similarities in ownership of those three types of real estate. Condominiums - Condos
An individual condo owner holds title to the condominium unit only, not the land beneath the unit, so condos can be stacked on top of each other.
All condo owners share title to common areas. Common areas include land, the exterior of buildings, hallways, roofs, swimming pools -- any area used by multiple owners.
Condominium owners pay property taxes on their individual units.
A property owners' association usually manages the complex and collects fees from all condo owners in order to maintain common areas.
Townhouses - Townhomes
Townhouses are usually a series of single story or multistory units that are linked to each other horizontally by common walls.
Townhouse owners hold title to their units and the land beneath them, so townhouse units cannot be stacked on top of each other. As with condos, common areas are owned jointly by all townhouse owners.
Townhouse owners pay property taxes on their individual units.
A property owners' association usually manages the townhouse complex and collects fees from all owners in order to maintain common areas.
Cooperatives - Co-ops
If property is a cooperative arrangement, title to all associated real estate is held by a corporation. Buyers purchase stock in the co-op corporation and are considered shareholders, not owners of real property. Each shareholder holds a lease to his unit that runs for the life of the corporation.
Taxes are paid by the corporation. Any mortgages are normally held and paid by the corporation. All costs to operate the building are shared by shareholders.
New cooperative shareholders must usually be approved by an administrative board.
Cooperative ownership is not common in most states of the US.
As for your question about some type of natural disaster..with a condo you only hold title to the unit itself and not the land it was built on...depending on who own title to the land would be the governing body of what will be built again on that land. As for compensation for your lost unit..that is a question best left for a real estate attorney.
A townhome you hold title to both the land and the unit..as for replacing if disaster strikes..you would probably need to check on the zoning for your land, surveyors to determine property lines with your neighbor..whom you share a common wall with..etc....another question for a real estate attorney.
With both condos and townhomes you will need to check with the HOA's guidelines...I have had some dealings with condo HOAs that restrict the owners from renting their units, the main reason I have seen is that the HOAs want to keep the condo units as condos...with homeowners invested in the condition of their property..and they don't want it to take on an "apartment-like" feel. With strict HOAs it is almost next to impossible to be able to lease units, and takes a lot of time, work and headaches!
to tag on to kristin, in your purchase offer should be a HOA contingency that requires the documents for the HOA be delivered to you and you have a certain amount of time to read them. If they have ANYTHING you do not like, you can cancel your agreement AS LONG AS IT Is WITHIN THE TIME FRAME. You know, that is how it is in VA, you need to check the laws in your own state..... Another reason to have a real estate agent, : )
Typically, condo ownership is a weird thing. The way I've heard it most often is the person who buys a condo is actually buying a percentage interest in an entity that owns the thing, and along with the percentage interest they have the right to live in a certain unit.
But it varies from condo to condo, so take a look at your documents and hopefully it will explain it.
One thing to note is multifamily buildings are often considered commerical, which means you have to have a licensed person (not a homeowner) do a lot of stuff, like replacing light switches and other ordinary tasks. It can add to expense.
In general in a condo you own two things - something in which you live an a share in the rest of the property. In high rise style condos you may own the volume inside the wall board. Anything from the front surface of the walboard is community property.
In townhouse style condos you may well own the land that underlays your unit. You likely do not own the exterior surface of the walls and the roof but everything else inside is yours. In some places you may own the front courtyard.
The way to tell is to look at the paper. Asking someone also helps but that which you are buying is officially described somewhere.
The rest of the place and the surround is owned by everybody jointly. Your shares passes and is attached to the thing you own.
Coops are different. There you own a share in a corporation and have a right to use a unit. You don't actually own anything except your piece of the corporation.
For rental rights read the papers. If there are restrictions on your rights to rent they have to be included in the documents you agree to. So ask and read the documents. Note that restrictions come in two flavors. The very basic docs may include a right for the Association to restrict rental rights. The Association rules may then enforce the right. If there is no basic right to restrict rentals they can't do it unless you agree.
As has been said, there really are a lot of different situations.
For example, I live in a townhouse. I own everything, from the bare land to the roof. I have a joined wall with another unit on one side, but our building code requires townhouses be built basically as two single houses side by side with dead air space in between, so the only thing that touches is the roof and the siding. I don't share ownership of anything, and the HOA doesn't maintain anything for me.
Condos are a whole different ballgame. Definitely read your paperwork, and ask for a copy of the CC&R's as well, if they exist.
One other thing, from what I understand, condos require a different sort of insurance as well, be sure to talk to your insurance agent.
As has been said, there really are a lot of different situations.
For example, I live in a townhouse. I own everything, from the bare land to the roof. I have a joined wall with another unit on one side, but our building code requires townhouses be built basically as two single houses side by side with dead air space in between, so the only thing that touches is the roof and the siding. I don't share ownership of anything, and the HOA doesn't maintain anything for me.
Condos are a whole different ballgame. Definitely read your paperwork, and ask for a copy of the CC&R's as well, if they exist.
One other thing, from what I understand, condos require a different sort of insurance as well, be sure to talk to your insurance agent.
That would be OK if you have physical seperation of the roof and siding. Otherwise there are going to be big problems when a repair or replacement is needed. I remember brownstones done in that way but I don't think I have seen modern construction that would make that workable.
If it has a common roof or even a single continuous roof you got problems.
That would be OK if you have physical seperation of the roof and siding. Otherwise there are going to be big problems when a repair or replacement is needed. I remember brownstones done in that way but I don't think I have seen modern construction that would make that workable.
If it has a common roof or even a single continuous roof you got problems.
It does have a continuous roof, and continuous siding. Repairs are easy. If they are on my side, they are on my property and thus my responsibility. Replacement will be an issue and will have to be agreed on by both owners. You are correct on that. It was new construction with a 30 year warranty on the roof, so I don't anticipate having to deal with it for some time. Repainting will probably be the first issue I will have to deal with. The Hardi-plank siding holds paint a long time though, so I have a few more years before I have to deal with that either.
I like to think I am on good terms with my neighbor and we can deal with issues that arise when and if it becomes necessary. Then eventually, I either buy the other side for a rental or sell mine and move out. Either way, I don't have to worry about it anymore.
Either way, the problems are little problems, not big problems. Big problems would be the house burning down. Deciding who pays for maintenance is minor.
The point I was making is that each situation has to be looked at individually. There is no one correct answer. The OP asked about townhouse/condos and the two are so different that they make the question very difficult to answer without more information. The definitions of townhouses can vary a lot. In my neighborhood, the common areas are owned by the HOA, not jointly by the homeowners, and we all maintain our own yards. Condos are even more diverse, from what I understand.
As for renting the place out, that would not be something anyone can answer for you, you need to see what the documentation says is allowed.
It does have a continuous roof, and continuous siding. Repairs are easy. If they are on my side, they are on my property and thus my responsibility. Replacement will be an issue and will have to be agreed on by both owners. You are correct on that. It was new construction with a 30 year warranty on the roof, so I don't anticipate having to deal with it for some time. Repainting will probably be the first issue I will have to deal with. The Hardi-plank siding holds paint a long time though, so I have a few more years before I have to deal with that either.
I like to think I am on good terms with my neighbor and we can deal with issues that arise when and if it becomes necessary. Then eventually, I either buy the other side for a rental or sell mine and move out. Either way, I don't have to worry about it anymore.
Either way, the problems are little problems, not big problems. Big problems would be the house burning down. Deciding who pays for maintenance is minor.
The point I was making is that each situation has to be looked at individually. There is no one correct answer. The OP asked about townhouse/condos and the two are so different that they make the question very difficult to answer without more information. The definitions of townhouses can vary a lot. In my neighborhood, the common areas are owned by the HOA, not jointly by the homeowners, and we all maintain our own yards. Condos are even more diverse, from what I understand.
As for renting the place out, that would not be something anyone can answer for you, you need to see what the documentation says is allowed.
I would not buy such a place. You have a massive hole in your ability to control your own destiny. Far worse than an HOA. You may well have to go to court with your neighbor to fix a roof leak. That is madness. To have a roof leak you cannot fix is a really big problem. And going to court to fix it is as big or bigger.
HOA is the mechanism used by the Common Interest Community to hold property. The HOA is owned jointly by the owners of the condos.
Townhouse is actually a description of a style of construction. They can be quite condo, a little condo or hardly at all. But they are virtually always a CIC and have a board and such.
Typically, condo ownership is a weird thing. The way I've heard it most often is the person who buys a condo is actually buying a percentage interest in an entity that owns the thing, and along with the percentage interest they have the right to live in a certain unit.
But it varies from condo to condo, so take a look at your documents and hopefully it will explain it.
In this case, you are referring to a Co-op, not a condo.
In a Co-op, you get a quit-claim deed, and you own a share of the collective whole (with exclusive rights to your inside and outside footprint) like stock in a company.
In a Condo, you get a warranty deed, and you own full title of your area (your footprint; in and out; ie; deck, patio, etc.) minus common areas.
Sometimes in the case of condos and co-ops, and I think this is very important, the land the real estate is sitting on, could be a "land lease" which has an expiration date. If this is the case, then you would want to know the detail of the deal, like expiration dates, and if the community plans to purchase...
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