“We’re Buying a Condominium!”
You hear this expression more and more as condominium ownership now covers almost every form or residential housing. Townhomes, duplexes, single-family detached homes and apartment buildings. The principles of condominium ownership apply equally to all.
When you buy a condominium unit, you acquire individual and absolute title to the particular space which your unit occupies. In addition, you own an undivided interest — collectively with all other unit owners in the condominium — in all the ‘common’ parts of the property, such as the land, main walls, roofs, halls, lobbies, stairways, and other parts of the condominium property used jointly by all owners.
Your ownership of your unit is as complete and absolute as ownership of a house and lot. You have title to your unit just as you would have title to a single-family home — with the same legal status and financial advantages that are held by the single-family house owner.
- You can obtain your own mortgage with freedom to arrange the size and down payment, terms, and prepayment privileges. As the mortgage is paid off, the accumulated equity belongs to you.
- You are only liable for your own mortgage — not for any of your neighbors.
- You receive an individual tax assessment and are liable solely for your own taxes.
- You have the personal income tax advantage of home ownership — both real estate taxes and mortgage interest are tax-deductible.
- Because each living unit is owned individually, your ownership interest or your share of the common elements cannot be affected by any misfortunes or legal actions, which may beset owners of the other units.
- You may rent or sell your unit whenever you wish in accordance with the terms of the condominium agreement.
How Can I Own Space in a Building or a Development?
Think of the matter as having title to a cube of space. You are purchasing — acquiring title to — a unit “air lot,” in just the same manner as you can acquire a title to a peice of land on the earth’s surface.
The principle of such air rights has long been established by law and there have been numerous commercial buildings erected on air rights over railroad tracks or other property.
A condominium is simply a variation of the process whereby each of a number of persons owns a “unit air lot” and they all own, in common, the land and remaining portions of the property.
Can Title to My Unit Be Insured?
It not only can, but should be, in exactly the same way that titles are insured for owners of other types of property.
Each purchaser of real estate wants to be certain of a good title — a title that is free and clear of any cloud, or defect, or claim that might possible affect ownership, or cost money at some future time, or make it more difficult to dispose of the property when one wishes to do so.
The same considerations prevail concerning the title to your condominium unit. As the owner of a condominium unit, you are in the same situation as any other property owner.
Title insurance policies are an accepted form of protection for buyers of real estate, providing that the buyer is receiving good title. Such a policy insures the rights of an owner, and makes certain that the owner will be able to convey good title when the time comes to sell.
How do I Benefit from My Condominium Title Insurance?
A title insurance company generally works closely with the developers of condominiums and their legal counsel to resolve problems and set up the procedures necessary to make the safeguards of title insurance available to those entering into this form of real estate ownership.
A fundamental problem is that of precisely and accurately describing the location of each individual unit in space; that is to say, establishing the physical boundaries of the unit with the same type of legal description that exactly locates a piece of land and identifies it from all other pieces of land anywhere else on the face of the earth.
Your individual unit must be described by dividing, locating, and measuring it, in three-dimensional terms, so that it cannot possibly be confused with any other unit space, if you are to have good title. Only by doing so does it become possible for a condominium purchaser to be safe from involvement in the interests or obligations of owners of other units in the condominium and to acquire such an interest in your own property as will permit you to obtain a mortgage on it, and at a later time dispose of the unit through sale or by your will.
Your title insurance policy insures — guarantees to you — that your condominium declaration and the deed to your particular apartment, do, in fact, thus describe, locate and identify your unit to the exclusion of all other space on earth.
Further Protection Provided by Title Insurance
Your attorney will explain to you that the title to your unit — and the safety of all that you have invested in it — are dependant upon the soundness of the title to the parcel (or parcels) of land on which your condominium dwelling has been erected.
You and other co-owners are the most recent parties in a continuous “chain of title” going back through all of the owners, mortgage lenders, and other parties who have ever had some interest or rights in the land on which your condominium home stands.
Just as when a single-family house and lot is bought, the title to the dwelling, which you are buying, is only as good as the weakest link in that chain. Somewhere down through the years which this land stood vacant, or while it had other structures on it, there could have been a forgery, irregularities in a deed, or unsatisfied judgements against previous owners. And you’ve heard of missing heirs, or persons declared legally dead, turning up at long last to claim their rightful share in property — with dire consequences to those who may have subsequently purchased it.
These are called “hidden risks” when real estate is purchased. There are others, and most cannot be discovered by an examination of the public records. You have no practical ways of learning about these hidden risks or weaknesses in the title to the land beneath your condominium home — and hence, weaknesses to the title to your unit. Laws that govern ownership of all real estate may protect such unsatisfied claims even if they are generations old.
These are some of the reasons why the developers of your condominium dwelling may have arranged for each unit buyer to have the protection of a title insurance policy. It is the best assurance you can have that you are receiving good title. It is exactly the same kind of title protection used in the sale and financing of many real estate developments — from small cottages to multi-million dollar commercial and industrial complexes.
(Note: The information in this article is intended to be general in nature. Plan to discuss your particular circumstances with an attorney for how this might apply to you.)
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