What is a condominium? The word condominium comes from the Latin "con" meaning jointly, and "dominium" meaning ownership or control. Technically, condominium is a form of ownership, not a form of property. A condominium is created when the declaration of condominium, together with the plat and building plans are recorded in the county where the property is located. Individual dwelling unit estates are created within a larger property estate. When you own a condominium, you have fee simple title to the air space contained within the walls, floors, and ceilings of your unit, and an undivided share in all of the "common areas" of the condominium project in which the unit is located. The term condominium is often used interchangeably to mean either the project as a whole, or the individual unit. Again, from a technical viewpoint, the project is the condominium; the individual living unit is referred to as the apartment or unit. Condominiums can come in all sizes and shapes, from high-rise luxury towers to older, converted apartment houses.

The condominium style of ownership dates back to early Roman times. By the Middle Ages, separate ownership of rooms and floors within a building was common throughout Europe. In the United States, condominiums were first popularized along the Eastern Seaboard, and in resort areas. In part, lack of density delayed the growth of condominium development in the Western United States. Today, condominiums are in high demand in many urban markets and often sell out completely before construction is finished.

In Washington State, the enabling legislation is the Horizontal Property Regimes Act (R.C.W. 64.32; http://wsl.leg.wa.gov/wsladm/rcw.htm) enacted by the state legislature in 1963 and amended in 1965. It is based largely on a Model Act drawn up by the Federal Housing Administration. A 1961 amendment to the National Housing Act (section 234) first authorized FHA insurance on mortgages of condominium units. Each of the states and territories of the United States has its own condominium law. By 1969, all fifty states had passed specific legislation enabling condominium ownership.

The Declaration of Condominium (a.k.a. Master Deed; Declaration of Covenants, Conditions and Restrictions: Plan of condominium Ownership), when recorded, extends the condominium laws of the state to the property. It establishes an association, and gives authority and power to the Board of Directors to administer the affairs of the condominium. The Bylaws and the rules and regulations are the basis for the day-to-day operation of the condominium interests. The bylaws are viewed as secondary to the declaration of condominium. Changes in the declaration generally require consent of 100% of the unit owners. A change in bylaws, however, generally requires only a simple majority.

Common areas are fully described in the declaration of condominium of each project and vary widely. Generally, common areas include the land, main walls, foundations, roofs, hallways, elevators, swimming pools and other recreational areas and parking lots. Detached carports and garages are sometimes owned by the association and assigned to individual unit owners, and sometimes they are owned with the unit. Garage and carport spaces owned by the association and assigned to a unit owner, along with decks, patios and storage areas, are typically referred to as "limited" or "restricted" common areas. The use of these areas is limited to one unit owner even though the association retains ownership. Fees are charged on a monthly basis to each owner for the upkeep of the common property and payment of other common expenses.

The declaration of condominium contains the bylaws of the association. Owners' Associations are created in condominiums through the bylaws. The association is usually operated as a nonprofit entity, but does not have to be. The bylaws of the association outline the means by which a board is elected to oversee the operation of the project and address the care and maintenance of the common areas. The bylaws also give the board authority to assess and collect necessary money to maintain the common area and maintain the financial stability of the project. The bylaws also provide for enforcement of unpaid dues or special assessments through the placing of liens on the individual units of those owners who fail to pay as agreed.

Each unit owner is typically given one vote, but there may be other formulas used to determine the undivided interest in the common area. Other ways to determine undivided interests include:

1. By value - dividing the value of the single unit by the value of all units.

2. By living area - by dividing the living area of the single unit by the living area of all units.

3. In equal shares - by dividing the total number of units into 1.

4. By market price - by dividing the market price of the single unit by the market price of all units.

Regardless of the formula used, the ratio should remain fixed. Any ability for the unit ratio to change in the future could have an adverse affect on the individual apartment unit. Generally, a change in ratio would require a change in the declaration.

Condominium ownership is very different from cooperative ownership. Cooperative ownership is "a form of ownership in which each resident of a cooperative apartment building has purchased shares in a corporation that holds title to the building. The individual pays a proportionate share of operating expenses and debt service on the building owned by the corporation, based on the amount of stock held in the corporation. In return for stock in the corporation, the individual receives a lease granting occupancy of a specific unit in the building."

Condominium ownership of nonresidential property has been growing in recent years, as well. Most commonly, long-term businesses are best suited to condominium ownership. Medical practices and service businesses such as legal and accounting practices have been the most popular uses in commercial condominiums, however this type of ownership has been applied to everything from boat slips and airplane hangars to parking garages, hotels, and industrial parks. The first commercial condominium was the headquarters building of the First Federal Savings and Loan Association of Puerto Rico in San Juan, built in 1960.

Is condominium ownership right for you? Look for my next article on condominium lifestyle and the pro's and con's of condominium ownership.

Bill King