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What is a Condominium?

Condos are a form of ownership where the Homeowners Association (HOA) owns the land and all of the improvements including but not limited to the buildings.  The home owner has title to the inside of a unit, sometimes referred to as being from paint-to-paint meaning they own everything from the paint on the inside walls of their unit.  The homeowners association owns the rest of the property and is responsible for the upkeep on the outside of the building and the common areas like halls as an example.

Think of the Homeowners Association as a corporation with all of the shares of stock being owned by the people that own a unit in the project.  Members of the association elect a board of  directors just like a company does to manage the business of the association.  Members of the board must usually own a unit in the condo community.  I say usually because the HOA can make up their own rules and regulations.


Condo living has many advantages.  It frees the home owner from outside maintenance like snow removal, yard maintenance, upkeep and repairs to the exterior.  It also allows the community to share the cost of amenities that an individual may not be able to afford on their own, a pool, tennis courts, etc.

 Although the form of ownership is the distinctive attribute that determines if a property is classified as a condominium, the forms of physical appearance are unlimited. A community of buildings that appear to be regular single family homes may in fact be a condominium development.  Remember, it isn’t the type of structure but the type of ownership that determines if it is a condo or not.

However, most of the condos in my area are attached structures.  This causes the density of people living in a given area to be higher than subdivisions containing detached structures. This closeness can provide added safety for the individuals living in the community. A thief may be reluctant to break in if your neighbor’s front door is only three feet away from yours.


Like everything in life, what one person perceives as an advantage others will view as a disadvantage.  Condo living can be a more intimate form of ownership, you have an opportunity to know your neighbors on a deeper level and likewise they may know more about you.  The HOA assumes the responsibility of the exterior parts of the community which means they also control budget.  This is probably the most common area of discontent for an individual.

If all of the neighbors decide they want to tear down the gazebo and install a pool in its place then they could vote to assess the members of the HOA to pay for the project.  If you didn’t want a pool you still must pay your portion of the cost, even if you can’t swim.  That is an exaggerated example but issues of mismanagement or budget disagreements are the most common disadvantages to this form of ownership.

Properties age, roofs need to be repaired or replaced.  The same is true of gutters, exterior paint, sidewalks, parking lots, everything needs attention someday.  So the HOA must set aside a reserve for unknown future events and maintenance.  Whatever it takes to keep the community running on a daily basis there also needs to be a reserve account.  Lenders want to see at least 10% of the annual budget set aside in a reserve account.

I have noticed that some developers of condominium communities do not adequately fund the reserve accounts in the initial selling stage.  They will also frequently pick up some of the cost of maintenance in their development budget, like grass cutting as an example.  In the initial stage of the development the developer controls the HOA usually until all of the individual units are sold and then they turn it over to the owners.  This practice could make the HOA dues substantially lower than they should be.   A real disadvantage if you expect the HOA dues to be $100 when they should be $200 or more.

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Financing A Condominium

Financing a condominium is not impossible but it can be tricky.  The very elements that make them attractive to a home buyer are the same items that can hinder the financing process.  For example, compare the difference of adding landscaping to the front yard of a single family residence and that of a condominium.  If …

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We Finance Condos

We provide financing for condos offering conventional, FHA, VA and KHC mortgages.  The projects must be approved by either Fannie Mae or FHA.  Currently (2/25/12) there are no condo projects located in Kentucky on the Fannie Mae approved list.  This is understandable because of the expense of submitting a property using the Project Eligibility Review …

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