Do you own land when you buy a condo?

If you are considering a condo purchase the question of who owns the land under a condo has probably crossed your mind. Do you own land when you buy a condo? What exactly do you own once you sign on the dotted line at closing? And how is ownership of the common areas divided?

Do You Own Land When You Buy A Condo? No. When you buy a condo unit, you own the air space within the condo itself and an “interest” in the condominium association, a not-for-profit legal entity that is managed by the Home Owners Association. The land on which the building stands is owned by the association, not by the condo owners.

So when you buy a condo, you do not own any of the lands under the building, and what you do own will depend on your particular HOA. This makes it critical to understand the legal side of condominium ownership in general and how the variances between HOA’s can affect what you are buying, and have the ability to resell, in a specific building.

“Condo” actually refers only to a legally recognized type of property ownership and NOT the physical attributes of a property. The word Condominium is Latin, a combination of “con” meaning “together” and “dominium” meaning “property, ownership, domain.” So, literally “Owning a property together.”

Confusion over what it means to own a condo arises because our common understanding of the concepts of property and ownership differ from legal definitions.

Legally speaking, when you buy a condo you purchase an interest in the condominium association, and the details of what you may or may not own in the way of physical elements of the unit in which you live will vary from building to building.

Once would-be buyers discover they will own an interest in the condominium association, the next step is usually to assume that as such they must own a percentage of the land. The reasoning is as follows:

I own an X% interest in the condominium association – For this example let’s call it 10%
Therefore I must own 10% of everything owned by the condo association
The condo association owns the land
I own 10% of the land

Makes sense right?

It might make sense, but that doesn’t make it correct.

Think of it like this:

Most businesses in the US are what is known as “Sole Proprietorships.” In this business model, everything belonging to the company is the property of the owner or owners. However, legally speaking there is no distinction between the personal and business assets and responsibilities of the owner. As a result, the owner could be forced to sell their home to cover business debts or to sell business assets to pay a personal debt.
A corporation business model separates personal and business ownership and legally treats the corporation as a person. This means that when you buy shares in a corporation, you are buying shares in the dividends and voting rights but you do not own any of the business assets or debts. As a result, shareholders cannot be forced to sell personal property to cover company debts.

Therefore, if you own shares in Apple, you own the right to receive a proportion of the voting rights and dividends equal to the ratio of the shares you own, but you cannot walk into Apple and take a percentage of the equipment that is equal in value to the percentage of shares you own.

Owning a condo means you own an interest in the condo association, which gives you particular ownership rights, the details of which will be recorded in the “articles” of the association. It does not mean that you own X% of the physical structure of the building or the land on which it sits.

What DO You Own When You Buy A Condo?

To discover exactly what you own when you buy a condo you have to review the governing documents for the building or development. These are the condominium map and the Covenants, Conditions, Restrictions, and Easements – usually referred to as the CC&R’s.

So, for example:

The roof and exterior walls are most frequently considered to be common elements which leads to the phrase “Airspace condo“, but your condo unit might include the interior of the external walls, such as the drywall.
Interior walls, floors, and ceilings are usually part of the unit, and as such, they belong to the owner. However, this could be the whole wall, only the drywall or even just the paint on the surface.
Doors and windows, you may own the frames, glass, and hardware, or they may all be part of the “common assets.”
Just as with other types of property the fixtures and fittings of a condo are typically considered to be part of the unit. So you will usually own the sinks, kitchen and bathroom cabinetry, flooring, etc.
Outdoor areas can be the exclusive property of the unit owner, or they may be common elements or limited common elements. The concept of “exclusive common elements” is used in situations where, for example, a unit has a private balcony, and all balconies are maintained by the HOA. If the balconies were common elements, in theory, anyone would be allowed to use any balcony. Instead, the “exclusive common elements” approach allows an HOA to retain the rights and responsibilities for any common feature but to restrict who has permission to use it.
Systems such as HVAC, plumbing, and electrical are often the most difficult to determine. The most standard practice is for the “feeding” elements of the systems are common, and private ownership begins at the point where the system crosses the threshold of the unit. So, a pipe is communal until it passes the point of the wall, floor, or ceiling where your ownership begins, and the pipe from that point onwards is yours.

Who Owns The Common Areas In A Condo Building?

The common areas in a condo building are owned by the HOA.

But guess what?

This doesn’t mean you have automatic access to all common areas.

In the CC&R’s the common elements will be split up into one of three forms:

General Common Elements. The general common elements are the ones which all owners have the right to use. The features found under this designation are usually those such as stairways, elevators, lobbies, entrances, and exits, etc. The land on which the condo stands is usually a general common element.
Limited Common Elements. This category is in place to allow the HOA as a whole to own and maintain a feature but restrict the features use to a segment of the condo owners. This may happen in the case of a patio which is for the use of owners on a specific floor or, in some buildings, only certain units will have use of the pool, gym, or another particular amenity.
Exclusive Common Elements. As we have already discussed, the exclusive common element category allows the HOA to remain responsible for the upkeep of something like your balcony, while retaining your exclusive right to use it. Without this, you might have your fellow condo owners popping by to use the “common use amenity” outside your window.

Some condo associations do not use the “exclusive common elements” designation but instead, use” general and/or limited use elements” with “exclusive use rights” for those elements such as balconies, etc.

Why Do You Need To Know Exactly What You Own?

Why is it important to know exactly what you own when you buy a condo? As long as you can enjoy your unit and come and go as you like, what difference does it matter?

It matters

In fact, what you own has a significant impact on your rights and responsibilities in three areas in particular.

Maintenance & Repairs

When you purchase a condo, you will need to know which are the elements of repair and maintenance for which you are personally responsible.

I know of unsuspecting buyers who have received fines from their HOA for failing to complete repairs for which the owners didn’t even realize they were responsible.

Your usage rights

It often comes as a surprise to discover that not all amenities are for all owners. If the use of the beautiful sundeck on the roof, or the outdoor kitchen and entertainment area on the tenth, is essential to you, double check you can actually make use of it before you make an offer. Either that or include a clause in your offer that specifies the sale is contingent on the verification of your rights to certain amenities.

Insurance coverage requirements

If you are unclear about the details of your ownership, then it is impossible to be sure that everything you own is included in your insurance policy. Never assume you know who owns which element of the condo or building. Confirm, confirm, and confirm so you can adequately protect your investment.

The Final Word

You do not own the land under the building in which your condo is located, and the specifics of what you do own vary from building to building. Be careful to inspect the C, C, & R’s of the HOA and ensure the details of your ownership are crystal clear before you make your purchase.