What are Unit Factors in Condominiums?
Condo unit factors are used to define the portion of ownership in a condominium building or complex. They are much like ‘shares’ in a company but the company in this case is a condominium. All condos are divided up into 10000 unit factors and each owner has a certain amount of them based on the size of their portion of the common property.
Real Estate Agent Explains Unit Factors
Unit factors are set by a developer when a condominium is built. In a conventional condominium, they are typically based on the size of the units. The larger the unit, the more unit factors an owner has. The smaller the condo unit, the less a person has.
Here is an example of a building and its unit factors:
In the above example, we have 9 units in a small condo building. The total size of the building is 6540 ft2, but no matter how large or small the building is, the unit factors are always 10,000. Some units have more unit factors than others because they are larger. Basically, unit factors show the percentage ownership to two decimal places. In the chart, unit 5 is 810 ft2. This means they they own 12.39% of the condo. The chart gives the percentage ownership rounded off, but it is not as accurate as the unit factor column.
In the case of bare land condominiums, the unit factors should be determined by the size of the lot, and not by the size of the unit. Bare land condominiums are a little differently defined than conventional condominiums, but the concept is the same. If you own more of the complex, then you will have a larger unit factor and hence a larger percentage of the complex.
Why Does It Matter?
Unit factors matter a lot to a condominium owner. Since they determine how much of the common property is owned, they also determine how much the owner needs to pay for the condominium complex or building. That is, the more unit factors, the higher the condo fees and any special assessments will be.
If you own a condo with 1236 unit factors, then you are typically responsible for 12.36% of the yearly condo fees. If the condo needs to take in $65,000 per year, then you will be charged $65,000 x 0.1236 = $8034.00 per year. That is $669.50 per month for that unit. It shouldbe noted that there could be other ways to calculate condo fees, but it would be very rare to see anything but the unit factor method.
Besides the monthly cost of condo fees, another important thing with unit factors is that they do determine your voting power in a special resolution. The more factors you own, the more control you have over the future of your complex.
by +Alan F Macdonald REALTOR® | Copyright © – gimme-shelter.com