Condominium
... is a form of ownership ... that can be applied to any type of structure ...
from a single-family-detached home to a unit in a 40-story high-rise.
A “condo” may involve a high-rise apartment-style building,
or a single-level duplex, or a four-plex, or a detached home, etc.
The above is true in any state, not just Arizona.
Technically, a condo owner owns the air space within a specific unit and a proportional share of all physical elements of the entire property, and usually has the responsibility for maintaining any systems and equipment that apply only to the owner's unit.
Previously in metro Phoenix, most condos involve townhouses, patio homes, detached homes, or a mix of two or more of these structures. Until recently, there have been relatively few apartment-style condos. But that is changing - many apartments are being "converted" to condominium ownership, plus more high-rise residential structures are being initially built for condo ownership.
Many other commonly used real estate terms
are almost universally misunderstood.
The following explanations may be helpful.
Agent ... Broker ... REALTORŪ
The term REALTORŪ may only be used by real estate professionals who are members of the National Association of REALTORSŪ and subscribe to its strict code of ethics.
Only brokers are licensed by the State of Arizona to act on behalf of others in a real estate transaction and to be paid a commission.
“Sales Associates” (agents) are hired as independent contractors to facilitate such transactions, but the broker must approve all documents involved and answer to the State for problems/complaints. The broker pays commissions to the agent based on an employment contract between them. A real estate company may have hundreds of agents, and even "associate" brokers, but only one “designated” broker.
An "associate" broker is a person who holds a fully qualified Arizona Broker license but is working simply as a sales associate, not as the "designated" broker for the realty company.
An extensive discussion of duties and obligations of a Buyer Agent is provided at AZ Real Estate Agency , and of the very specialized services provided to buyers by a Buyer's Agent at Buyer's Agent.
CC&Rs ... Covenants, Conditions and Restrictions
CC&Rs are the "heart and soul" of
a Homeowner Association (HOA). The CC&Rs are created
by the developer of the subdivision, are recorded, and are provided to buyer prospects prior to
the initial purchase. These are “the rules of the road” for
the initial and subsequent owners, and the HOA if there is one.
The CC&R’s, and HOA ByLaws, spell out how changes can be made to
these controlling documents, which usually requires an
overwhelming vote of approval by the owners.
Note – CC&R’s
can exist and apply for a property even though there is no HOA.
Dwelling Types
- SFD - Single Family Detached ... a stand-alone structure
- PUD - Planned Unit Development ... most often these are SFD structures that are built with "zero lot lines", in very close proximity to each other. Commonly, looking at a PUD, people commonly assume condominium ownership, when that's not the case.
- Patio Home - a single-level living unit that has one or more common walls with other living units.
- Townhouse - a multi-level living unit that has one or more common walls with other living units.
- Condominium - a form of ownership that may be applied to any type of structure.
These terms have unique meanings, despite that the latter three are often used interchangeably. "Condos" are discussed in detail above.
Although patio homes and townhouses involve one or more common
walls with other living units, these structures may be "condos" or individually
owned, i.e., owned fee simple. These are also referred to as
zero lot line structures when individually owned.
Homeowner Association - HOA
A Home Owners Association (HOA) will exist anywhere there are living units with common walls because where there are common walls there will also be common property elements.
Actually a HOA exists for most newer subdivisions for one or both of two reasons: (1) there are common property elements to most subdivisions - such as green belts, parks, community pools, etc.; and/or (2) developers create a HOA for the subdivision so owners may exert architectural control in the future - such as adding a floor to the structure, or restricting exterior colors.
The CC&Rs (see discussion above) define owner limitations and responsibilities, and may provide for a HOA to manage any common property elements. In the case of a condominium, the entire property outside the individual units is a common property element.
A HOA consists of all property owners in the development, plus the developer until all units/lots are sold. Owners elect a Board of Directors, who normally must be owners. This Board then manages the HOA according to the rules specified by the HOA Bylaws and the CC&Rs.
Arizona real estate ownership has the following forms:
- general and limited partnerships
- corporations
- sole and separate
- tenants in common ... unequal interests with rights to respective heirs
- joint tenancy with survivorship ... equal shares with rights to survivor
- community property ... married couples with rights to respective heirs
- community property with survivorship ... married couples with rights to survivor
Community Property with Survivorship was new to Arizona in 1995, and is presently available in only a few states. It applies only for married couples. With this form of ownership, the spouse inherits property rights without probate, and benefits from the tax advantages associated with community property
