Condominium Or Townhouse?

[Jo Ann Meyer Stratton]

John W: Its words like town house or row house or patio home, etc, etc, etc that are realtor terms.

Black's Law dictionary, Sixth Edition:
Condominium: System of separate ownership of individual units in a multiple-unit building. A single real property parcel with all the unit owners have a right in common to use the common elements with separate ownership confined to the individual units which are serially designated. An estate in real property consisting of an undivided interest in a portion of a parcel of real property together with a separate fee simple interest in another portion of the same parcel, in essence, condominium ownership is a merger of two estates in land into one; the fee simple ownership of apartment or unit in a condominium project and tenancy in common with other co-owners in the common elements.

The condominium concept was not rooted in English common law and most condominiums in the United States are formed in accordance with specific state enabling statues. As defined by Uniform Condominium Ace (1-103(7)), is "Real estate, portions of which are designated for common ownership solely by the owners of those portions. Real estate is not a condominium unless the undivided interest in the common element are vested in the unit owners."

In other words---read the subdivision CC&Rs in light of your specific state's laws. To meet the requirements for loans to be purchased by Fannie Mae, read Section 301 - Units in Condominium Projects, effective June 30, 2002.

 

[John Wilson]

Originally posted by Jo Ann Meyer Stratton@Jul 28 2003, 04:43 PM
As defined by Uniform Condominium Ace (1-103(7)), is "Real estate, portions of which are designated for common ownership solely by the owners of those portions. Real estate is not a condominium unless the undivided interest in the common element are vested in the unit owners."

Yes, I agree with the actual definition.

Within that definition it states ".....portions of which are designated for common ownership solely by the owners of those portions......"


What ever is left after you take away those "Portions" is the remaining "Fee Simple" bundle of rights.

However you slice it, it remains a "Fee Simple Interest" in a "Condominium".


It's either Fee Simple or Leased Fee. You either own it ( or a portion of it ) or you lease it.

 

[Debra]

Hello!

If you have a townhouse or condo to do an appraisal on in an area where they are rarely if ever rented out - do you need to do an income approach or can you just do the usual cost approach and sales comparasion? Debra

 

[Mike Garrett RAA]

Depends.....is the unit you are appraising a rental? If so, then they are going to want an Income and Expense Analysis and a Comparable Rent Schedule.

 

[Debra]

Hello again!

Well...according to the zoning office and registar of deeds it is a in a planned residential unit and considered a condo with the developer owning the land. So I'm assuming that it has no land value. They want it put on a 2055 form. If I understand you correctly, if it is rented I would need to do an income statement and comparable rent schedule. However, if the property owners are living in the condo I do not need to do the income statement and comparable rent schedule...right? Thanks Debra h34r:

 

[Mike Garrett RAA]

Thats right! Just remember you, not the lender, makes the determination as to what form is acceptable for you to report your appraisal on.

 

[Farm Gal]

Debra:

Lee Ann's stock answer: It depends...
Most lenders and ANY lenders intending to market a loan on the Freddie Fannie secondary market have to have the rental comparables and operting income statement...

but

if they intend to hold the loan in-house or bundle it directly to REIT investors, usually all they need is 'an appraisal'.

That notwithstanding, when I accept such assignments it is with VERY clear warning that the cost is x for the appraisal if ordered minus the additional forms, x+A for appriasal and forms if ordered prior to inspection, and X+(A times 3) if they come back and order the forms after the fact... so the individual ordering had best be very sure of what they want and clearly convey it to me BEFORE I leave my office ~ or for that matter schedule up the rest of my week ...

Revisits cost plenny extry :twisted:

 

[Debra]

Hello again!

Since there are very few condos and townhouses in this area...can townhouses be used for comparables to the condo if necessary? If so...do you make any adjustment for the townhouse owner owning their land and the condo owner not owning their land??? On the 2055 do you make a statement that the cost approach was not applicable because they didn't :blink: own their land or what? Any other advise??? Thanks! Debra

 

[Walter Kirk]

Debra,
The answer to your question depends on your market area. Do fee simple townhouses and condominium units compete for the same buyers? If so they are reliable comparables, if not you must use olded condominium sales.

 

[Debra]

Hello!

Well...it turns out that there appears to be two good condo sales during the past year and one that's 1.5 years old. So...I'm going to use them and comment - comment - comment. The condos are newer, higher priced and in better locations than the townhouses that sold during the past year or so. Do I still do a cost approach with just the building values or comment that the cost approach wasn't applicable because there is no way to put a value on the land that is owned by the developer? This will be considered a complete appraisal correct??? Also...should I include the master deed in the appraisal report? Thanks! This is my first condo. We only have a few streets of them here in this county. Debra