When you’re a first-time homebuyer, chances are you’re adding a lot of new terms to your vocabulary. Escrow, closing costs…what does it all mean? They don’t teach you about real estate transactions in high school, so when and where are you supposed to acquire this knowledge? The best way is by asking a professional realtor. Today we want to examine two popular types of ownership for homebuyers and what that means to you – condominium and fee simple ownership.
Condos sometimes look like apartments or multi-unit structures, but they can also look like townhomes, garden homes or duplexes. If you purchase a condominium, you generally own the space inside the unit as an individual. You also jointly own the common elements of the building, or an undivided interest in the land and the structure held in common with other condominium owners in the building. The common elements are typically exterior walls, the roof, decks, plus the common land areas and recreational facilities.
Along with condominium ownership come condominium fees. These fees typically cover the cost of maintaining everything outside of your individual unit, although water consumption is often times a part of the condominium fee instead of an added cost. The condo association will have a master insurance policy on the jointly owned components of the property, and you will only need to insure what’s inside your unit. A condo association makes decisions on when and how the money from condo fees will be spent, whether that’s on unit improvements, repairs or managing common areas. As a condominium owner, you should never have to worry about replacing the roof, repairing windows or painting the structure’s exterior. Your condo fee will cover it!
Before purchasing a condominium, read the Condominium Declaration document to understand your responsibility and that of the condomium association. There are several condominium documents, which are mandated by the state and require the latest version of information and budgets to be provided to every purchaser. A purchaser will receive this information prior to closing. Review them carefully. If you have questions, don’t hesitate to ask your realtor.
Fee Simple Ownership
Fee simple ownership is a “freehold” estate, which means that you own the land and everything on the land for the duration of your life with the right to transfer it to your heirs, depose of it at any time or place restriction on it as you wish. It is regarded as the highest level of ownership in this country. As the owner, you are responsible to maintain and insure everything on the parcel of land.
Although you own everything on the property, you may still have to pay dues and be a part of a homeowners association. Homeowners associations usually have rules and regulations about how you can alter the outside of your home and whether recreational vehicles are permitted to be stored on the property. Their goal is to make sure the neighborhood remains beautiful and well maintained so that home values stay as high as possible (for everyone’s benefit).
Understand What You’re Buying
No matter which type of home you choose to purchase, make sure you fully understand what owning that type of property entails. Familiarize yourself with the rules and regulations of the condo association or the homeowners association. When deciding what to buy, make sure to factor in dues for either of these associations into your budget. As a first time homebuyer, don’t be afraid to ask as many questions as you need so that you’re crystal clear on what you’re signing. There’s no shame in asking questions, and your realtor is here for just that purpose.
For more information on condominium and fee simple ownership, contact Jacobson Realty and Home Staging. We’d be happy to explain in more detail what real estate terms mean to you as the homebuyer.