Terminology

Condominiums

Each owner of a unit owns his or her unit, normally in fee simple (freehold). The owner also owns an undivided share of communal grounds and structure. Each unit can be bought, sold, leased, mortgaged and taxed separately. Developers must warrant the roof, structural mechanical and plumbing components for three years after completion. Other components must be warranted for one year. Buyers may rescind a purchase contract within 15 days for a new contract, or 3 business days for resales. The time period begins when the buyer signs the contract or receives the required condo documents, whichever occurs later. A condominium always has an HOA (Home Owners Association) with rules that govern common areas and unit appearance.

Hotel Condominium

This is the latest way to buy commercial real estate. Just like when you buy a flat you only buy your unit not the whole building, when you buy a hotel condo you buy a room and not the whole hotel. You receive a deed owning your unit fee simple (freehold). You can mortgage, lease, sell and pay taxes on it separately just like any normal condominium. But just like any normal hotel room they can be rented out by the day or week. The advantages are you can own a piece of investment property, have it professionally managed like any hotel, but you don’t have to rent or maintain the property yourself. The disadvantages are you have to book well in advance to use your own unit. If you choose not to rent out your unit you have to pay very high HOA fees yourself with no income to cover them. The units come fully furnished and have all the amenities of any comparable hotel. The split of net income varies from 50%-100% depending on which company will be managing it. Read the small print.

Single-Family Homes

Free standing (detached) house designed for one family to reside in. The owner is responsible for their own maintenance and insurance. Usually these are owned fee simple (freehold). In some developments there maybe a HOA (Home owners association) and rules may apply.

Co-op

Not very common in Florida. Unlike a condo where each owner owns their own unit, to purchase a co-op, you must buy shares of stock in a corporation who owns the whole building and grounds. The more expensive the unit, the more shares you must buy. The problem with co-ops is you don’t have a deed saying you physically own any building. You receive a proprietary lease with the right to occupy the unit for the life of the corporation. To purchase, you must comply with strict restrictions of the board of directors or trustees and pass interviews. It is much harder to get a financing, and you need a real estate lawyer to buy or sell. Once you own a co-op it is much harder to sell the property for the same reasons.

Time Share

Florida has strict rules on time shares. First the property must be divided into a condominium. Each unit is divided into time segments, usually 52 of 1 week each, each owner has an undivided interest in the unit according to the number of weeks purchased.. A deed or some evidence of ownership must be prepared for each time segment. The price of each share depends on location and size of the unit, as well as the time of the year purchased. Time share act applies to any unit divided into more than 7 periods. The developer must disclose to a buyer that he or she has the right to cancel the contract within 10 days of signing for new developments, and 3 days for resales. Time shares have had a lot of bad press; as a result values do not increase in line with other real estate investments. There are two types of timeshares.

“Interval Ownership” is fee simple ownership, you can sell rent bequeath, or give it away.

“Right to use ownership” this is a much bigger gamble. You do not have fee simple ownership, only the equivalent of a leasehold, a right to use for a set period of time. After that the rights go back to the developer. Under some bankruptcy conditions your rights that you have already bought and paid for may become unenforceable.