Percentage of ownership is the basis of a member’s ownership, typically in a condominium, COA. This percentage determines dues amounts and voting rights. How the initial property developer determines percentage of ownership for each unit can vary from condominium project to condominium project. This percentage ownership is typically established in the declarations of covenants when the association is first formed.
Per each condominium project there would be a uniform formula used for calculating this percentage ownership. This formula is typically based on the intrinsic value of the unit as it relates to the value of the entire association. This formula can be based on many different factors: square footage, number of bedrooms, number of bathrooms, location in the building, and other aspects that can be calculated into the value of the unit.
These percentage of ownership calculations are generally found in the appendix of the declarations of covenants of the condominium. This appendix schedule or table will many times specify corresponding percentage ownership by individual unit. With the total percentage of ownership of all the units totaling 100% of the entire association.
If a COA is built in different phases, the percentage ownership will change with these additions to the association. The declaration of covenant’s appendix will be amended by the association developer to reflect the change in percentage ownership. Reducing the prior member’s ownership percentage and including the new construction to once again total 100% of the entire association.
This reduction in ownership interest may or may not reduce the overall HOA budget needs. Typically with additional construction and additional units being added to the association, expenses are not reduced. This is generally because the expenses of the initial phases essentially mirror the budget requirements of the new phases.
Copyright 2019 William Douglas Management, Inc.