What is a Condominium?

A condominium, or ‘condo,’ is a residential dwelling located in an association that is governed by specific bylaws. Every association is unique in its rules and regulations, so it is highly recommended that one familiarize themselves with these governing procedures before purchasing or leasing a condo.

Condominium Fees

Unless explicitly written in the lease, the tenant is NOT responsible for the payment of any association fees or dues.

Utilities / Services

If the tenant is obligated to pay utilities or services, they must pay EVEN IF it’s a separate charge by the condominium association.

Disclosures

A condominium is considered a residence, and the landlord will be obligated to provide the required disclosures in accordance with state law.

• Lead-Based Paint – Federal law mandates that landlords must provide this disclosure if the structure was built prior to January 1, 1978.

Co-Op vs Condo

Co-ops (“housing cooperatives”) and condos are two types of property that are often confused with one another. While both types of property exist within a larger building, they contain many notable differences.

Ownership

The major difference between these two types of dwellings lies in the structure of ownership. When a person wants to live in a co-op, they have to purchase shares of the corporation that owns the building. The co-op will often dictate the minimum number of shares that must be purchased in order to live in a unit. The more shares that are purchased, the larger the unit that can be purchased. All shareholders split the cost of upkeep, repairs, taxes, and other expenses.

When a person purchases a condo, they physically own the interior of a certain unit within the entire building. The process is more comparable to purchasing a home (without worrying about the exterior of the property). When the purchase is finalized, the new owner will receive a deed to the unit.

Purchase process

Unlike condominiums, co-ops don’t let anyone purchase a unit. If a person wishes to buy shares in a co-op, they have to present themselves before the board members to complete a series of interviews. The interviews are used to determine whether or not the buyer would be a good fit for the community and if they would be able to afford their portion of the taxes, repairs, and maintenance on the building. Co-ops are very focused on building a community, meaning they want to ensure each buyer will follow the rules and be compatible with other shareholders.

Ease of renting

Because co-ops are so focused on the community, they often restrict residents from being able to rent out their units. In order to rent out a resident’s space, they’d need to gain approval from the board. Even if permitted, they’d most likely have to conform to stringent requirements. Although the condominium association can enforce rules regarding renting, it’s rarely as involved as co-ops, mainly because there is no board overseeing residents.

Costs

Co-ops are typically cheaper than condos by the square foot. However, if a person is looking to finance shares in a co-op, obtaining financing is typically far more difficult due to the board limiting who the shares can be sold to. As far as monthly fees go, they are typically cheaper in a condo.

How to Rent Out a Condo

This is a six (6) step guide on how to properly rent a condominium.

Step 1 – Prepare the Property

The landlord should prepare the property for lease by making sure it’s in excellent condition. This may require calling professionals and hiring a cleaning company to conduct a “deep-clean” of the premises. This involves moving the furniture and scrubbing each nook and cranny of the space (use Thumbtack to find local cleaners).

In addition, the following should be cleaned or checked:

• Air vents, heaters, or air conditioner filters
• Fire alarm batteries
• Carbon Monoxide batteries
• Fire escape plans

Step 2 – Gather Property Information

The landlord should gather all property information to provide as many details to the tenant as possible. At a minimum, this should include the following information:

• Square footage (SF)
• Number (#) of bedrooms
• Number (#) of bathrooms
• Furnishings provided
• Appliances provided
• Common areas accessible to the tenant

In addition to gathering the property information, the landlord should obtain a copy of the association’s bylaws for prospective tenants to read prior to moving in. For example, there could be association rules about pets being a certain weight limit that the tenant should be made aware of.

Step 3 – List the Condo

With the information collected in step 2, the owner should create a listing for their condominium online. There are several platforms to choose from, and owners can decide to list on however many as they see fit. It’s arguably more important for the landlord to complete one (1) high-quality, detail-rich ad than several low-quality ads. A few popular options include Zillow, Facebook, Craigslist, and Apartments.com.

Step 4 – Screen + Approve Applicants

Any renters that show serious interest in signing a lease for the condo should be required to complete a rental application. Once the tenant completes the form, the landlord will go through it and look for anything that would suggest the tenant could be problematic. They should also conduct a background check to look for previous evictions, criminal history, credit issues, and more. The average background check will cost around $20. Popular background check providers include Experian, SmartMove, and RentPrep.  Calling the references the tenant listed in the application is also recommended. Landlords cannot deny a tenant for anything protected by the Federal Fair Housing Act, which includes anything relating to the applicant’s race, disability, color, national origin, religion, familial status, or sex.

Step 5 – Create & Sign the Lease

Once a tenant has been approved, a condominium lease agreement can be downloaded (PDF, Word (.docx), or OpenDocument) and completed. Complete all required fields and edit any fields to ensure the agreement is in-line with the condo association’s rules. Go over the entire agreement with the tenant and any other important property or condo association documents. The agreement will then need to be signed (by hand or using eSign) by the landlord and tenant. Guests of the tenant do not need to sign the lease. The owner should then perform the following tasks:

• Collect the first (1st) month’s rent.
• Collect the security deposit.
• Provide the tenant with keys to the outside of the building, the unit, and any other accessible areas.
• Have the condo’s office create any parking and/or entry passes.
• Set a move-in date with the tenant.

Step 6 – Collect Rent & Monitor Expenses

The landlord will need to collect rent on a monthly basis until the lease terminates. Additionally, they should monitor all expenses related to the condo, as these can be deducted later on. The owner should be reachable in the event the tenant needs to ask for repairs or help with any another issue. Upon termination of the agreement, the owner should go through the entire unit with a checklist to look for damage. As long as the tenant paid their rent on time and in full and left the rental damage free (apart from standard wear and tear), the owner should return the full security deposit to the tenant.

Sample

Download: PDF, Word (.docx), OpenDocument

How to Write (Instructions)

Step 1 – Party Names

Start by entering the full date on which the agreement will become effective. Then, enter the names and mailing addresses of the landlord and tenant.

Step 2 – Condo Info

The landlord will need to enter the street address, city, state, and unit number (#) of the condo. The condominium association’s name should be written in the last field.

Step 3 – Length of the Agreement

The “term” section is used for specifying how long the contract will be binding. Start by entering the beginning date of the lease. Then, check the first box if the lease will have a fixed-term, and enter the date in which the lease will terminate. If the landlord wishes to make the agreement a periodic lease (no end-date), the second box should be checked.

Step 4 – Rent Payments

Enter the total amount ($) of rent the tenant will be required to pay for the lease term. If the agreement is month-to-month, the field can be left blank. On the next line, enter the amount ($) of rent the tenant will pay per month followed by the method of payment. Finally, enter the day of the month on which the rent is due.

Step 5 – Security Deposit

It is recommended that the landlord ask the tenant to pay an upfront security deposit. The landlord will need to enter the amount ($) of the deposit followed by the number of days the landlord has to return the deposit after the termination of the contract. State landlord-tenant laws should be consulted for the maximum deposit that can be made and the timeframe landlords are required to abide by for returning deposits.

Step 6 – Parking

Enter the number of parking spaces the tenant can use during the lease. If the landlord intends to charge the tenant for the space(s), enter the fee in the second field. If no fee will be charged, the field can be left blank or “$0” can be entered.

Step 7 – Occupants

If there will be other occupants of the rental that aren’t included in the lease, the names of these people should be written in the spaces provided. Then, enter the maximum number of people that could potentially stay on any given night in the condo.

Step 8 – Utilities

In a condo, it’s standard for the landlord to pay for water, sewer, and heat and let the tenant pay for the remaining utilities. However, the landlord can decide to break up the utilities any way they wish. All utilities that will be paid for by the tenant should have a checkmark beside them. Any appliances included in the condo should also be listed (refrigerator, microwave, washer/dryer, etc.).

Step 9 – Pets

There are three (3) options the owner can select regarding tenant pets. If any and all pets are allowed in the rental for a certain fee, check the first box and enter the amount ($) of the additional monthly fee. If the landlord wants to restrict the tenant to a certain type of pet (such as a small dog), describe the type of pet and enter the amount of additional fee. Finally, if the tenant is prohibited from having a pet in the condominium, the third box should be checked.

Step 10 – Sale of Premises

Enter the number of days the tenant will be given in the event of a sale of the condominium. The common length of time is sixty (60) days, although state law should be referenced to ensure the tenant is given a fair amount of time to prepare to move out.

Step 11 – State Law

Enter the name of the state in which the condominium is located.

Step 12 – Signing

The form has to be signed by the landlord and the tenant(s). Both parties will need to:

1. Enter their printed names;
2. Inscribe their signatures (with eSign or by hand); and
3. Date their signatures.

Once this step has been completed, a copy should be kept by both parties. Once the landlord receives the tenant’s security deposit, first months’ rent, and any other fees, the landlord can allow the tenant to move into the property.