The Essentials of Common Interest Communities

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The Essentials of Common Interest Communities

There are three types of common interest communities in my state of Connecticut and in most states.  They are condominiums, planned communities and cooperatives.  Each state has its own version of these but the descriptions provided below are similar throughout the states.  This article will be about the basics of homeownership of each.


cooperativeI’ll start with cooperatives first to get it out of the way.  This is the one of that I know the least about for two reasons: (1) there aren’t many in Connecticut and (2) they have nothing to do with FHA condominium approvals.  I know what they are and learned about them when I took my Real Estate class in 2001 to become licensed as a salesperson.

Cooperatives are a form of common interest ownership whereby the owner buys a share in a corporation.  The corporation owns everything: the buildings, the units, the land and all improvements on the land which could include garages, parking, pool and tennis courts.  When the shareholder purchases into a cooperative, he/she owns a share of the entire corporation which includes a living area that is solely for his/her use.

So, in essence, the person is buying a share of the corporation and is given exclusive access to a living area.  Of course, the buyer chooses which space to inhabit – much like the buyer of a house – but the shareholder really doesn’t “own” anything except a share in the corporation.  Cooperatives are commonly high-rise structures (especially in the NYC area) but can come in all forms.  My cousin lives in one in Western Massachusetts that is a community consisting of manufactured housing.

Enough about cooperatives.  On to more fun stuff…


high rise condoCondominiums are a form of common interest ownership whereby the unit owner purchases a unit in the condominium project which also includes appurtenances.  The appurtenances that accompany a purchase into a condominium community vary from project to project but generally include the common elements and limited common elements.  Each unit owner has an undivided percentage of ownership interest in the common elements and limited common elements.

The unit is the physical space that unit owner actually owns and lives in.  This can vary greatly amongst condominium projects.  This article describes the principal varieties of condominium units.

The appurtenances are a percentage of ownership interest in the common elements that are included with each unit.  With condominiums, the unit owners own a specified percentage of the common elements, which is everything that exists outside of the units but within the boundaries of the community.

townhouse condosFor example, if the unit boundaries are the vertical walls from the basement floor to the roof rafters, everything that exists outside of this area is designated as common elements.  This means that every unit owner has a percentage of ownership to your front steps, patio or deck and parking space.

Limited common elements are common elements but are delegated for use only by unit owner to which they are assigned.

An example of this would be a deck attached to your unit.  If this is outside of the unit boundaries, then every unit owner in the community has a percentage of ownership in your deck.  However, because it is a limited common element, you have the exclusive right to use the deck.  This is also true of patios, parking spaces and even front steps or any other elements (such as mechanical features) that are delegated for the sole use of a specific unit owner.

Because each unit owner has an undivided percentage of ownership interest in your deck, all unit owners collectively own the deck; however, no one unit owner can come to your deck and claim that a specific 6 square inches is his.

Planned Communities or Planned Unit Developments (PUDs)

planned community unit PUDOwnership in a planned community or PUD is very much like that of a condominium.  Each owner owns his unit and everything within the unit boundaries.  The unit boundaries can include just the interior of the unit; the interior and exterior; or the interior, exterior and a piece of land.  The buildings can be stand-alone or grouped together like townhomes.

The major distinction between a planned community and a condominium is that the unit owners do not have an undivided percentage of ownership interest in the common elements.  The HOA owns the common elements.  Each unit owner is a member of the HOA which collectively owns the common elements.  However, when there is a transfer of title, the owner only transfers the unit because there are no appurtenances as with condominiums.

For more information about common interest communities: the Association, Monthly Fees and Legal Documents, please visit The Essentials of Common Interest Communities Part Deux.

Cooperative photo: photo credit: La Citta Vita via photopin cc

High rise condo photo: photo credit: compujeramey via photopin cc

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The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA.  We have assisted nearly 200 condominiums and we can help your association.


ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.


Please contact us with any questions regarding FHA or VA condominium project approvals.  You can email me at or call me at 404-433-4565. I will be happy to answer any of your questions.


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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Debbie Reynolds 03/07/2014 11:42 AM
  2. Winston Heverly 06/07/2014 03:28 PM
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Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Lifetime Friend/Helper!

Well defined article Eric.  You can possibly get more mileage outta this if you later revise and divide it into three posts.  COOPs, CONDOs, PUD's.

Mar 04, 2014 11:05 PM #12
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Thank you very much Joan.  I actually had to break it into two posts (the second one posted this morning) because it was too long.  I still only scratched the surface!

Hi Franthank you for commenting.  FHA has certain criteria that must be met before a project can get approved.  Once it has been determined that the project meets the criteria, specific documentation is supplied to the jurisdicational homeownership center for approval.  It is a simple process but highly detailed and very time-consuming if you've never done it before.

Mar 04, 2014 11:07 PM #13
Jeremy Joslin
Coldwell Banker Residential Brokerage - South Windsor, CT
Professional Real Estate Marketing and Sales

Excellent explanation of the differences Eric.  We were just discussing this in my office last week and I also plan to share this. Thanks

Mar 04, 2014 11:10 PM #14
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Thank you very much, Bruce.  I had thought of that because the above article doesn't provide great detail of any of them but I purposefully did it this way for now.  Thank you for the idea!

I'm pleased that the article has value for you, Jeremy.  We're neighbors, by the way

Mar 04, 2014 11:25 PM #15
David Evans
HUD NLB Cumming GA

Interesting info, good to see someone doing this to expedite closings, great post!

Mar 04, 2014 11:31 PM #16
Sheila M Lacher
Very interesting article. Condos, co-ops, PUDs present many different problems when bought or sold. Much to learn if you are involved in a sale or purchase. Thanks!
Mar 04, 2014 11:49 PM #17
Travis "the SOLD man" Parker; Associate Broker
Team Linda Simmons, Enterprise, AL 36330 - Enterprise, AL
email: / cell: 334-494-7846

Very good definitions & differences. NONE of those are common in my local area, but now I know more IF they come here.

Mar 05, 2014 12:12 AM #18
Hella M. Rothwell, Broker/Realtor®
Carmel by the Sea, CA
Rothwell Realty Inc. CA#01968433 Carmel-by-the-Sea
PUDs and condos definitely vary from state to state but the essentials are the same as you stated herewith. Excellent overview.
Mar 05, 2014 12:37 AM #19
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Excellent post on the differences and similarities of coops, condos and puds.


Mar 05, 2014 01:36 AM #20
Jeff Jensen
The Federal Savings Bank/Lending in 50 states - Greenwich, CT

I have been fortunate enough to have more than 95% of my mortgages on single family houses.

Mar 05, 2014 03:53 AM #21
Trent Dalrymple (248) 854-0625
Texana Bank - Bloomfield Hills, MI
Allowing Mortgage Professionals to Lend Nationwide

Thanks for the information, always good to refresh ourselves with the definitions of different forms of "common interest communities", we don't see co-ops here in Michigan, if ever, but still good to know.

Mar 05, 2014 05:56 AM #22
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I understand the differences.  I do not think we have the same destinctions in California.

Mar 05, 2014 08:45 AM #23
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Eric,

All mentioned exist in our area. Awaiting part deux ....

Mar 05, 2014 10:22 AM #24
Suzanne Otto
Six Twenty Designs - Lansdale, PA
Your Montgomery County PA home stager

Excellent information here. Many buyers don't understand what exactly they're getting when purchasing one of these options.

Mar 05, 2014 11:22 AM #25
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Thank you very much David

Sheila, common interest communities are a whole different animal in real estate.  The basics of selling and buying remain but there are many overlays that consumers and agents need to know about.

Thank you Travis.  I guess I won't be hitting up you for referrals!

Thank you for reading, Hella

Kimo, I appreciate the feedback - thank you!

Single-family homes certainly are less paperwork when it comes to financing, Jeff

Trent, I don't know of any here in CT either but I don't doubt they exist.

Is anything the same in California, Gene?

Hi Dorte: part deux is available.

Thank you Suzanne.  When I bought my condo, I didn't understand any of this stuff.

Mar 05, 2014 06:55 PM #26
Marney Kirk
Cummings & Co. Realtors - Towson, MD
Towson, Maryland Real Estate

Hi Eric! What a great post! I am from West Hartford -- there aren't many co-ops there! Condos have just become more prevalent there in the past 15 years. Here in Baltimore, we have both -- many more condos than co-ops, though! :)

Mar 06, 2014 10:50 AM #27
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Thank you very much, Marney.  I live on the other side of "the river" in CT.

Mar 06, 2014 06:59 PM #28
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Hi Eric, this was very interesting to me because I have only read about these forms of ownership. None of them exist in my small north Idaho hometown.

I like to know all I can about real estate in other areas because I write for agents across the country - and even in other countries. Education is good!

Mar 12, 2014 03:13 PM #29
John Juarez
The Medford Real Estate Team - Fremont, CA

Great information, Eric, and a good read for anyone selling (Realtors) or buying in a community that may be condo, PUD or coop. Many buyers only find out what they really bought way after they have bought and moved into their new property.

Mar 24, 2014 02:46 PM #30
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

HI Marte, common interest communities are a whole different animal than standard single-family home sales.  There is a lot that goes in to a sale in one of these communities.

Thank you, John.  I am included in the group you mention as I didn't read the legal documents and really understand condominiums when I bought one as my first home in 2001.

Mar 26, 2014 03:24 AM #31
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