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 of an apartment house) is individually owned while use of and access to common facilities in the piece such as hallways, heating system, elevators, 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 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.
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 of 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 typically is beyond economic reach. Additionally, such properties benefit from having restrictions that maintain and enhance value, providing control over blight that plagues some neighborhoods. Big cities, including San Francisco, Chicago, New York City, Los Angeles, Miami, Atlanta, Calgary, Seattle, Mississauga, Edmonton, Vancouver, and Toronto, are major condo users.
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 "time share" although not all time shares 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 it is 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 color/design choices visible from the exterior of the units. Condominiums are usually owned in fee simple title, but can be owned in ways that other real estate can be owned, such as 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.
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 recognized 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 recognized 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 harks 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 to 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 slowdown 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 the developers were in almost a 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 also 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 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 in which the lease renews in perpetuity or over a very long term such as in a civil law emphyteutic 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; distinguished from joint tenancy with right of survivorship or a tenancy in common of common law.
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 that city's skyline has had a forest of cranes erecting new towers. Outside of Toronto, the most common forms of condominium have been townhomes rather than highrises, 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 organization'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 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 06/Jan 07, p. 28.)
Both new construction and the resale housing market have been driven by increasing sales in the condominium segment which can include both high-rise buildings and townhome complexes. Since buying or selling a condominium requires special expertise and knowledge, it has become important to use the services of a professional with experience in this area and many realtors will now specialize in this housing segment. As a realtor that specializes in condominium and townhome properties, June Smith points out that “you are not just buying a home, but buying into a community and a lifestyle. Important considerations when buying into this type of property and lifestyle include security, privacy, recreational facilities, outdoor space, noise levels, pet policies along with other rules and regulations, parking, storage, condominium management and financial status of the condominium corporation.”