When You Buy a Condo Do You Own It? 4 Things to Know About Condominium Ownership

What Do You Own When You Buy a Condo?

For many people, buying a condo is an attractive option for housing or investment. Condos offer convenient amenities. In many cases, they cost less to buy than a detached home and may also take less time and money to maintain. Of course, to buy a condo, buyers need to determine what ownership looks like in that particular condo community. There are different rules for each condo corporation and many unique types of condo ownership. Researching these factors can help buyers to find the right condo for them and have an easier time going through the buying process.

Buying vs. Renting a Condo

Before people can consider the benefits of buying a condo, they should understand the difference between buying and renting. In many cases, renting a condo is a relatively simple process. Prospective renters apply to a property owner or property manager. They may need to include their income, debts, or credit rating information. The owner or manager takes this information and uses it to determine whether the applicant qualifies to have a lease for the condo. Typically, rent includes access to the space and amenities in the community, but there may be extra fees for utilities and other services.

By comparison, owning a condo involves a longer buying process and more investment in the unit's upkeep and the community. To buy it, buyers have to make a down payment and then arrange to pay for the rest of the unit with a mortgage, cash funds, or other financing. In addition to the mortgage payment, condo owners are expected to pay property taxes, maintenance fees for the community, and some upkeep for the property. As such, it can be more expensive for someone to buy and maintain a condo than to rent one, but the lower cost of ownership is one of the main reasons to invest in a condo rather than a single-family home.

What Is the Ontario Condominium Act?

All declarations, rules, and bylaws for condominium communities in Ontario must meet the terms of the Ontario Condominium Act of 1998. This law sets requirements that condominium corporations have to follow when considering rules for the community. It also maintains some control over how these corporations can enforce the community's rules. Simply put, the act allows condo managers to set reasonable rules for the community and use of shared spaces as long as the rules do not make access to those spaces unreasonably exclusive. Owners are also required to follow these rules. If they have tenants, they may limit the regulations they can establish for the unit.

Although the law is designed to protect owners and residents in condominiums, many critics say that the law is too vague. They argue that there are loopholes that allow unethical practices that take power out of the hands of condo owners. They also claim that a lack of oversight renders the act ineffective because owners have little recourse to hold condo corporations accountable for unethical decisions. As such, buyers may want to investigate the condo corporation before buying in a particular community.

What Belongs to Me vs. the Community?

Condo Balconies Can Belong to One Owner or Two if Shared

Condo owners have access to the community through personal or common property. Condos come in different types, from detached homes to small units in single high-rise buildings. As a general rule, condo owners control the unit's interior for personal, exclusive use. In the case of detached or semidetached condos, owners may also have exclusive use of parking spaces or outdoor spaces explicitly designated for their units. In a freehold condo, owners have ownership over the unit and the land underneath it and are required to maintain it independently.

The condominium community also has several common elements, or shared amenities, that owners must agree to use communally. For example, residents may have shared access to amenities such as:

  • Swimming pools
  • Fitness centres
  • Dining facilities
  • Entertainment spaces

Some condo communities allow residents to reserve a shared space for private use, such as a clubhouse or banquet room for a party. Condo owners pay fees for the upkeep of these shared spaces, but with the typical need to employ space-saving condo design ideas, the common spaces can be vital.

What Are Pre-Construction Condos?

Buyers interested in investing for the future may want to consider pre-construction condos. Buying a pre-construction condo involves making a series of down payments over a period of years to buy the unit once construction is complete. Generally, pre-construction condo buyers start the process at least a couple of years in advance, although it could be as much as five years or longer. Instead of making a single down payment to purchase a condo that is ready for occupancy, pre-construction condo buyers often have a few years to cover the deposit. In exchange, they must be willing to wait to take occupancy or prepare the unit for rent.

Once buyers purchase a pre-construction condo, they get the benefits of ownership without having to make regular mortgage payments or pay fees for the property. They can even sell the contract once construction is complete for a quicker return on investment. Until the condo is ready for occupancy, however, pre-construction condo buyers do not own the unit in the same way they would when buying an existing condo. At the end of construction, they must prove that they can afford to buy the unit or risk losing the contract.

Understanding the Advantages and Limits of Buying a Condo

Buying a condo offers a lot of freedom to owners, whether they are planning to get started in real estate investing or purchasing housing for themselves. Condos make it easy for owners and residents to enjoy access to amenities and lower maintenance responsibilities, but there are limits to the lifestyle. In most cases, condo owners share ownership of the property, with rules surrounding common and personal property. Considering these advantages and limitations, people can determine if a condo is the best choice for their housing and financial goals.

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