ABA Family Legal Guide

Buying and Selling a Home

The Steps of Buying and Selling a Home

Buying in a Multiunit Building or Development

Are there differences between common-interest home ownership and single-family home ownership?

In single-family home ownership, the control, decisions, and expenses are the responsibility of the owner, subject to zoning restrictions established by local law and any restrictions contained in the declaration of the builder who originally developed the property and the rules of any homeowner's association. As a general rule, multiunit ownership is subject to more extensive regulation than single-family ownership. For example, there are generally more statutes, rules, and regulations governing what you may and may not do with your condominium, co-op, or other multiunit dwelling.

Before finalizing an offer to purchase, it is important for the buyer to obtain and review all the restrictions affecting the property. Buyers should ask to see the bylaws, operating budgets, management agreements, and other regulating documents. Many states require disclosures to the purchasers of units in a common-interest community. Some states have a central agency that licenses and regulates the development and sale of common-interest community units.

With multiunit real estate, the cost of the unit is not the limit of your financial obligation. There will be monthly assessments to cover maintenance and related expenses for operating the common areas. These assessments are usually in proportion to the percentage of the total complex you own, but may also take into account the floor and view of the unit. For example, if an apartment has a 10 percent ownership stake, this generally means that the owner will pay 10 percent of the building's assessments.

Assessments and other common area charges may increase over time. In addition, unit owners are subject to special assessments above and beyond the regular monthly assessment, to pay for unforeseen improvements or repairs and major capital improvements. Always ask about pending projects and their approximate cost, as well as capital reserves for the projected work. You also should be sure that there is enough liability and fire insurance coverage for the entire development.