Buying a Condo in California: Pros and Cons of Buying a Condominium

Anyone in the market for a new residence might consider buying a condo rather than a single-family home. This is more popular in urban areas than rural ones in California. While buying a condo has many benefits, there are also decided downsides that a potential buyer should consider before diving into the real estate market.

In California's expensive urban real estate market, a budget-minded home buyer is likely to at least consider buying a condo instead of a single-family home. But what exactly is a condo? The term "condo" stands for condominium, which is a type of shared property ownership.

Many people define a condo as a dwelling unit that looks like an apartment, but the person living there can actually own it. Others might describe it as a house, but one without a backyard. While a condo often falls into these descriptions, the actual definition of a condominium involves how people hold the title. In California, these dwelling units are called common interest developments.

Read More: Laws on Converting Apartments to Condos

Residential condos in California are private residences that can be owned by an individual or a couple. They are usually located in high-rise buildings with multiple units, and these condos look like apartments. However, detached condos can also be grouped in a community. All condos, however, share common areas.

What does common areas mean? It refers to any rooms, garages, hallways, yards or facilities like tennis courts or swimming pools that are shared with the owners or residents of other condos in the development. In smaller developments, the common areas might include only the entrance hall. In more luxurious or larger developments, common areas might include large, park-like spaces, indoor gyms and outdoor sports facilities.

Each person who owns a unit in a condo complex has the responsibility to maintain her own unit. However, she is not obligated to personally maintain the common areas. This can facilitate each owner's upkeep efforts, but it comes at a cost. Generally, the owners pay regular condo dues to a management board.

The management board is most often composed of other owners who are elected to the board by owners in the condo association, but it is also possible for the owners to hire an outside firm to manage the condo. Each owner pays the dues assessed to management. This management board then hires professionals to do things like landscaping, pool maintenance and any repair projects that need attention in the common areas.

Under California law, a condominium is considered a common interest development. In practice, this means that if a person buys a residential condo, he buys a separate interest in the particular condo unit, a shared property interest in all common areas included in the condo development, and a membership in the condominium association.

All of these terms are defined in the California statutes. For example, Section 1393 of the California Civil Code mandates the existence of a condo association that will manage the condominiums. It also requires that all condo owners be members of that association. That association can elect a board to manage the common areas. All members must have access to the financial documents and membership accounts.

Read More: Common-Interest Property Ownership in California: How Does it Work?

In California, condominium associations are authorized to require that the owners contribute financially to the upkeep and repair of the common areas. Monthly or periodic dues are called regular assessments. Under the law, the dues cannot be increased more than 20 percent unless a majority of the owners agree to this.

What if the owners want to undertake a large project, like installing a swimming pool or bolting the building's foundation? This can be done by special assessments, fees imposed in addition to the regular assessments. Under California Civil Code Section 1366(b), special assessments can amount to no more than 5 percent of the budgeted expenses, absent agreement by a majority of the owners.

Condominium associations in California can also impose other rules and restrictions. They often impose limitations on how publicly visible areas must be maintained. For example, the association can forbid owners from hanging laundry on porches and balconies. This type of regulation is permitted by California Civil Code Section 1351(i)(1), a statute that makes "awnings, window boxes, doorsteps, stoops, porches, balconies, patios... screens and windows" common areas. While nobody is permitted to use these areas in an individual unit without the owner's permission, the areas are subject to regulation by the homeowners association.

Note that a condominium association might also enact other rules that regulate the use of the property. For example, some condos do not allow owners to rent their units to tenants, while others restrict pets that owners can keep in the units.

Read More: Homeowners Association in California: An Overview

If an individual doesn't like dealing with difficult maintenance issues, a condo has advantages. Buying a condo comes with management of the condo development common areas. This means that when problems pop up with the common areas in the building or the grounds and landscaping, the individual owner does not have to get her hands dirty.

For example, when a person owns a single-family house overlooking the Pacific Ocean, and the land begins to erode, it is on her to locate and pay a professional to halt the erosion and protect the house. If the building is a condo project, the management board deals with these onerous chores. And that is true for even less dramatic examples. If the roof leaks, the basement floods or the garage needs sprinklers, it is the management board that locates an expert to handle the mess. And no individual owner must bear the cost.

A buyer who is longing for tip-top amenities needs to be truly wealthy to afford them in a private house. While there are single-family houses with swimming pools, there are fewer with indoor pools, private gyms and tennis courts. Condo developments can offer those amenities at an affordable cost. If a buyer looks around for a community that offers the very facilities the buyer dreams of having, it's possible to check all of the desired amenities off the list for a set monthly assessment fee.

But the amenities a buyer gets to use by owning a condo are shared by others, who are likely to include boisterous kids and people who talk too loudly. If an individual would rather stay indoors than go into a swimming pool with little kids, a condo might not be a good idea.

Every benefit of owning a condo has a connected downside. While many home buyers appreciate the fact that they aren't on the front lines when it comes to dealing with common area issues, they should not ignore the fact that they will have to help pay for each and every common area repair.

As a condo owner, the mortgage is not the only monthly bill that comes due for housing. A condo owner must also pay monthly dues as his regular assessment and special assessments as they come up. These can be in the hundreds of dollars and must be factored into a budget before you buy.

Moreover, delinquency of other owners can fall on condo owners' shoulders. Since the financial responsibility is shared, if one or more owners don't pay their dues, everyone else must cover for the delinquency. This can create financial difficulties for an owner in the short term, even if the amount is later recouped from the delinquent owner.

Condos are generally less expensive than single-family homes, although a particular condo might be more than a particular house. For example, in 2018, the average single-home price in pricey San Francisco was $1.61 million, while the average cost of a condo was $1.17 million.

And this is true across the state: Condominiums are usually priced lower than single-family homes. Depending on the region of the state and the specific community, the price for a condo might be dramatically lower than a single-family home. So for those buyers who are on a tight budget or whose income is lower, a condo can be the way to go.

Although a buyer may pay less for an average condo than for an average house, that really isn't comparing apples and apples. With a single-family, stand-alone home, a buyer gets complete control over all areas of the house. He can repaint it, plant a tree and hang laundry in the front yard if he decides to do so. He can keep pets and rent out a room or two of the house at his option. An owner of a single-family home who wishes to add a story to the place or install solar panels can do so as soon as he has the financing. He doesn't need to ask anyone's permission other than the building department.

But condos are regulated by the management board and, beyond that, by the condo association. If a majority of the owners decide to re-roof the building, the fact that one individual owner doesn't want to do so at that moment in time simply doesn't count. And if an owner wants to install a solar panel to save energy, he'll have to ask the condo association for permission.

In some types of condo developments, the facilities bring an owner closer to her neighbors. For example, if condos are situated in a park-like setting or have swimming pools or tennis courts, it is easier to meet others. This can be true if the only shared facilities are a washing machine in the basement or even just a garage. By definition, shared ownership creates opportunities to meet people. And for an owner who travels, the condo community is likely to protect her unit simply by being there.

On the flip side of that coin is the issue of privacy. Like living in an apartment, living in a condo means neighbors on the other side of every wall, and, perhaps, the ceiling and floor, too. Other condo owners will be tramping up and down the stairs and along the common hallways. They may come home late and wake others by opening and closing garage doors in the middle of the night. And crying babies will likely disturb more than just the baby's family.

It isn't likely a condo owner will get to sunbath naked in the backyard. And if she has a fight with a roommate, the entire community might hear it. For those who put privacy above price, condo living has some definite disadvantages.