Buying a house in the country is not the only way of achieving your dream of owning your own home. For many, buying a condominium offers an ideal route to home ownership: Often close to an urban center and involving minimal building maintenance and administration expense. Unlike with single-family homes, condominium owners are part of a community of owners. This article explains the rules, rights and obligations that apply to this form of home ownership.
Even in the most general sense of the word, when you purchase a condominium, not only are you buying an apartment, you are also buying shares in the entire land and building. This is therefore classed as co-ownership and the ownership share in the total property is expressed through the value share. The value share is calculated on the basis of the floor area of the purchased property, but also takes into account other factors such as floor location, floor plan or geographical orientation. Co-ownership is combined with the special right to occupy and design the apartment, including any basement or attic compartments and ancillary rooms belonging to the apartment, as the sole user and to complete interior work on the rooms. The special right usually includes the interior design of balconies, verandas and loggias.
Decisions relating to areas outside of the apartment, on the other hand, must be taken by the condominium owners’ association. This means that decisions on, for example, renovation work on the roof or facade can only be made jointly and costs have to be shared. A renovation fund is set aside for the renovation and refurbishment costs incurred, into which all co-owners pay amounts based on the value share of their apartment. Outdoor areas, such as allocated garden areas or parking spaces for which an owner has the sole right of use, are part of the common property. Further, major structural changes require the consent of the community.
In contrast to the owner of a single-family house, the condominium owner should always also view themself as part of a community that makes joint decisions concerning the building. Therefore, before making a purchase, the potential condominium owner should carefully review the documents on the rights and obligations of co-owners.
The notarized condominium declaration defines the specific share owned by each condominium owner in the whole. This co-ownership share is also called the value share and is registered in the land register in the name of the respective condominium owner. This decides, unless otherwise specified in the regulations, the share of maintenance and operating costs to be borne by the individual owners. Renovation costs are also allocated in accordance with this.
In the regulations, the condominium owners’ association sets down important provisions for living together. These include, for example, the tasks of the appointed administration, exclusive rights of use, the distribution of costs as well as voting rights and the voting system. The community is at liberty to adapt legal provisions that are not immutable to their own needs. Each condominium owner can submit a request for amendments, which is then voted on by the community of owners.
In addition to the regulations, condominiums often have house rules, which the owners draw up themselves or commission an administrator to do. Frequently, these contain provisions such as: Quiet times, whether and which pets are allowed, and what items may be left in the stairwell.
Building management is of great importance. Its tasks include administration and accounting but also the maintenance and management of the building. The details of the mandate are defined in the management contract.
It is also advisable to read the minutes of past annual meetings. These usually give an unbiased picture of the relationship between the condominium owners. You could also try to get to know the other owners personally, but this is not always possible. In this case, the minutes can provide a good first impression. These also show whether any renovation work is due to be carried out in the near future and to which the buyer will be required to contribute. Especially in the case of older residential buildings, it is important to check whether there is a renovation fund for these expenses and whether this contains sufficiently high reserves.
Here you’ll find the right mortgage offer for you.
Buying your own property is a significant decision. It is important to weigh up whether to buy a new-build apartment ‘off plan’ or an existing property. There are pros and cons to both options.
When buying off-plan, the buyer purchases an apartment that has not yet been built. This has the advantage that the buyer can have a say in many decisions, such as the choice of kitchen, flooring or bathroom fixtures, or can request modifications. Moreover, the buyer is essentially a founding member of the newly emerging community of condominium owners and does not have to fit into existing structures.
However, buying an unfinished apartment involves an element of risk, such as insolvency of the seller or general contractor or possible defects after completion. A good understanding of the sales documents and familiarity with the parties involved is therefore essential.
All documents describing the apartment should precisely define costs, deadlines and services, and be part of the contract. Payments should not be too high and should be calculated according to construction progress. To help you make a reliable assessment, it may be useful to speak to your bank.
When purchasing an existing condominium, the most important thing is to familiarize yourself with the existing rules of the community and to assimilate yourself into the community. As mentioned in the section ‘Important documents for condominium owners’, you should for example, familiarize yourself with the land register entry, the regulations and any house rules as well as detailed information on the renovation fund and foreseeable renovation work.
Some investors choose to purchase condominiums to rent out rather than live in themselves. Increases in rental incomes, especially in recent years, have made this a very attractive option. However, private investors should bear in mind the risk associated with a property remaining vacant.
Very few people can finance their own home completely out of their own pocket. This is where a mortgage comes in, supplementing your own savings with borrowed capital. Instead of rent, the owner pays mortgage interest and repayments to the mortgage provider.
Other costs include maintenance, utilities, and management costs for both sole-use and jointly owned areas and parts of the building. The current service charges of all condominium owners are typically determined jointly and distributed according to the value share – the larger the condominium unit, the higher the share of service charges.
Any repair work that may be required on the owner’s own apartment is borne solely by the respective owner. It is recommended to set aside about one percent of the property value for this, although it also depends on the year of construction and condition of the apartment. It is therefore advisable to take an in-depth look at the expected costs and be aware of the specific reserve contributions before making a purchase.
Given the shortage of development land which results in rising land prices, the dream of owning your own home in an urban location presents a financial challenge for many in Switzerland. The solution: Condominium ownership. However, condominiums also offer great advantages in rural areas. A condominium may be a good option for you, for example, if you have no desire to look after a large garden or appreciate the support of an administration. It is important though that condominium owners realize that they are not sole owners but co-owners and that certain decisions have to be made in consultation with the community responsible for the building.
