Ok, my whole family has either rented houses, temporarily, or bought them, so I have no experience to draw on here. After reading an article on condos sales falling in the LA Times, I have a few questions on a related subject. Why would someone buy an apartment? What happens if owner of said apartment decided to tear it down and build a parking garage?
People buy apartments so they can combine the benefits of homeownership (equity, tax deductions, good credit) with living in an apartment (no lawn to mow, living downtown, and a lovely view of the 900 square miles of asphalt that is Los Angeles.)
I don’t really understand the second part of your question – are you asking if the owner of a condo unit can build whatever he wants in his space? In general, the answer is no, because there is an agreement with the condo association or co-op that specifies what kind of renovations are permitted, and how the common areas of the building are to be maintained.
ETA: Another common reason to buy apartments is as an investment property to rent out to tenants. This can be a much more accessible real-estate investment as compared to buying a house or an entire building.
Well, the building owner no longer has the option of disposing of the building once some or all of it has been converted to condos. Every person who buys an apartment becomes a joint owner of the property.
Presumably someone might want to buy an apartment/condo as a stepping stone to actual house ownership.
Right, you might own it as far as the studs, for example, and won’t be able to convert the actual structure to anything else.
If the owner of the whole complex wanted to do something else with the land, I would assume they would buy back the condos? But doesn’t a whole association own the complex?
It depends on how the legal structure is set up.
In most condo arrangements, the unit owners own their small chunks of the building and the transaction is treated as any other real estate deal. There’s generally a non-profit association formed to maintain the common areas of the building and enforce rules, and unit owners pay a regular fee to the association, and elect its directors. It’s basically the same thing as a homeowners association.
In a co-op arrangement, which are common in New York City but unusual elsewhere in the US, a non-profit corporation owns the entire building, and people buy shares in the corporation which entitle them to a perpetual lease for one of the units. In this case the building is occupied by its joint owners, but the owners own shares in the building rather than the actual physical apartments.
In either case, a potential developer who wanted to raze the building would have to buy out all the owners. Or get a friendly [del]jack booted thug[/del] public servant to seize it by eminent domain.
Don’t know what you mean by “the owner of the whole complex”. The property is owned by the individual unit owners. Each has a % stake of ownership based on (usually) the size of their unit. That % is also what is used to calculate the association dues.
The condo bylaws will specify what kind of improvements or changes are permitted and how to go about getting the approval of the Board and all owners. For example, my bylaws state that nobody may purchase two adjacent units and then knock down the wall between them in order to make one enormous condo unit unless they have consent of all current owners in the building as well as all lien holders (all of the the banks that have a security interest in the property must also agree).
If you are interested in buying a condo, one of the first things to do is get hold of the bylaws and read them. They will tell you what kind of contractual living arrangements you are getting yourself into.
Yep. In my situation, for instance, my insurance agent informed me that I own not only my townhouse condo, but also the land it sits on. This is not the case for everyone.
In all condominiums, each unit owner has title to a certain percentage of the common elements, but, of course, owns his own unit 100%. A “unit” is defined in the condominium declaration and by-laws (different states may use different terms for “condominium declaration”: SC uses “Master Deed Establishing XYZ Horizontal Property Regime.”) It is this declaration that defines “unit,” “general common elements,” and “limited common elements.” The by-laws, and regulations and rules enacted pursuant to the by-laws sets forth procedural matters, such as meetings, and the number and terms of the officers of the board of directors. The unit is defined as the space between the floors and ceilings of an apartment or townhouse. Many condos now use a townhouse, which at one time would have been a townhouse and nothing more but now can be legally constructed as a condominium; the difference being ownership of the common elements. In a strict townhouse, the owners do not own any of the common elements, but have merely an easement for ingress, egress, use, etc. Title remains in the homeowners association.
Each unit owner has a percentage in the common elements depending upon the number of units and how many he owns. (If there are 40 units, each unit will have a 1/40th interest in the common elements.)
The homeowners association consists of the board of directors, which usually consist of the various officers elected at an annual meeting by the co-owners. The board normally does not have the expertise or experience necessary to manage a condominium development. The original declaration gives the board the authority to elect a property manager, which takes care of the regime fees, management, care, etc. Although the homeowners association may be the payee, the payments are actually made through a property manager. Most communities have many professional property managers, who manage condos, townhouses, neighborhood associations, etc.
The officers who comprise the homeowners association board are elected initially at the first annual meeting and, depending upon the conditions in the declaration, each annual meeting will elect some or all new officers.