My client is buying a condo in Hayward, CA. It is a ground floor unit on a 3-story building, which means there are two other units above it. I have explained to him, although he already had an idea, that with condos, you own everything that’s inside the four walls of the unit, but not the land where it sits. This is what differentiates a condo from a townhouse. Ownership of a townhouse includes the lot underneath and all space above it.

His next questions were, “Who actually owns the land? What happens to my condo if there are problems with the land? Am I bound to lose my condo, or am I liable to pay any fees if there are any obligations owed?”
 
The truth is while you as an individual condo owner don’t own the piece of land where your unit sits, you are actually a co-owner of the whole land covered by the condo complex. You and the rest of the homeowners jointly own the land. However, your percentage of land ownership cannot be separated from all other condo owners’ shares, nor can you convey or sell your piece of the land.

The Homeowners Association takes responsibility for the upkeep of the complex, including landscape maintenance, and other amenities available, such as swimming pool, clubhouse, etc. Part of the HOA dues that are paid monthly are allocated to pay for hazard insurance, as well as any taxes due on the land.

It is important to review the HOA documents (one big pile of them!) in order to find out the bylaws, rules and regulations governing the condo homeowners. This, plus the preliminary title report, will provide useful information on whether there are any encumbrances or any liens recorded against the property. I would not advice going into a purchase transaction if there are any liabilities that will potentially involve homeowners shouldering any expenses or penalties resulting from such liabilities.

It is wise to be informed. Decisions are easily made when all the information is in front of you, not behind you.