Forget the images of the retirement condo community in Boca or the anonymous, singles-only, low-rise, golf-course abodes on the edge of town that may come to mind when the word ‘condo’ is mentioned — especially if you’re not from San Francisco or New York.

In urban areas like San Francisco about 2000 single-family houses sell every year and about 2300 condominiums with the average price between the categories running at $1.7 million and $1.5 million respectively. Condominiums reflect both an entry point into our market as well as a destination — from a Diamond Heights studio to a downtown penthouse with amenities galore.


  • Lower average price point (citywide)
  • Pooled and shared responsibility and management of building and common areas
  • Possibly exempt from Rent Control laws and Eviction Control laws
  • Desirable inventory in desirable locations (planning and zoning favors more people enjoying a location through raising population density)
  • Developer and designer focus on this product category
  • Amenities
  • Various legal protections for new condominium buyers


  • Less independence because of Homeowner Association prerogatives, rules and governing HOA documents
  • Close quarters with neighbors (sound transmission/privacy/freedom)
  • Shared common areas (lack of yard/parking/storage)
  • Risk that other neighbor actions will impact you financially
  • Risk of a chilling effect if HOA-wide legal issues arise
  • HOA dues and assessments
  • Less flexibility to rent to short term or to take possession back

Here are a few quick items you should know about condos:

  • By buying a condo, you are also agreeing to be bound by the CC&Rs — covenants, conditions and restrictions — for a given building/association and, more relevant, the policing of those rules by a Homeowner Association, its management company or Board. Changing the CC&Rs is usually a harder thing to do and HOA decision-making can be akin to being on the student council.
  • Most HOAs in large buildings will be assisted by property management companies where management will be more procedural and formal.
  • For smaller associations (let’s say 2–4 units) matters are handled more informally where personal relationships and politicking is the norm. Both approaches have detractors and benefits. It’s just a matter of which is right for your needs and those of your other owners. 
  • HOA dues can range from $200/month to $2,000/month depending on a building/association’s size and what those dues cover, which depends on the amenities offered. The highest cost centers are usually when an HOA employs people like 24-hour security. Beware of the HOAs that have $100 or no dues at all because this means the HOA isn’t building up a reserve fund for repairs or a rainy-day fund
  • Most HOA dues go up, rarely do they ever go down. Increases are, however, usually only ever allowed after a vote of the HOA membership; usually, it’s one unit, one vote
  • Special assessments are those that the regular budget or reserves are insufficient to cover and are usually done for big-ticket repairs or issues (i.e., roof, painting, plumbing, mechanical issues)
  • California has an elaborate statutory regime mandating how HOAs are to be run, recordkeeping requirements and procedural requirements known as the Davis-Stirling Act

What is it that you get with a condominium?

When you purchase a condominium, you’re usually buying title to a subdivided, three-dimensional space within a “common interest development” per the legal jargon that defines these things. A condo ‘unit’ can be bought and sold, financed and willed like a single-family house can be.

But buying a condominium also means you’re not only buying the unit itself but you’re also buying into a homeowner association that ‘owns’ the common areas of a building like hallways, windows, roofs and yards. Many times you get a percentage ownership of those common areas and the exclusive use of a common area, i.e., patio or parking space. The HOA has an obligation to maintain these ‘common areas’ as well as to promote resident welfare meaning they are granted certain amounts of power to achieve those goals. The HOA also will have easement rights (unfettered access) to enter your unit if there’s an emergency like a water leak.   

  • Relevant condo maps will define how a given parcel is subdivided into units or lots, parking spaces, decks, storage and common areas. The survey map will likely include ownership percentages an owner gets for a given unit.
  • A condo development can consist of 100 units, 1000 units or 2 units with one being residential and another being commercial.
  • There’s no requirement the units within a condominium development be in the same structure as you may get the situation where there are different stand-alone structures on a given parcel that are legally separate condominiums. These maps are recorded with the county and are connected to every deed and mortgage on every other unit or lot within the common interest development. Changing the map or plan is next to impossible without every other owner agreeing to do so.

All the rights defining which parts of the condo development/subdivision belong to who, rules and allowed uses onsite are contained in a series of legally binding documents called the “CC&Rs” — Covenants, Conditions and Restrictions. The CC&Rs describe the rights and obligations of the homeowners’ association and of each owner. CC&Rs vary widely in content and length and usually cover the following topics:

  • the demarcation between private and common areas;
  • setting budgets, reserves, regular and special assessments and dues;
  • usage restrictions like pet regulations, alteration controls; maintenance responsibilities of the association and the individual owners;
  • leasing rights (is Airbnb allowed? Does the HOA get to veto a lease or just get information about it?);
  • how operating costs are shared among the owners, and the mechanism for collecting owner payments;
  • dispute resolution procedures between members and between members and the HOA; 
  • HOA Board or Member enforcement powers; and mortgagor rights;
  • Voting rights and election procedures for HOA Board Members;

CC&Rs are required for all condominiums and planned developments and are prepared by lawyers as they do have to conform with the Stirling-Davis Act and cannot contain any discriminatory housing provisions; also, new developments cannot bar dogs from being onsite either. 

HOAs can be as informal as just saying, “hi,” to your neighbor and ‘winging-it’ when it comes to paying the bills and having meetings. You’ll handle things as they arise and if there is no ‘reserve’ account (i.e., the HOA’s savings account) you’ll all have to pony up money when the roof needs replacing or if there’s a plumbing emergency. By contrast, other HOAs are very formal. We’re talking Robert’s Rules of Order formal meetings, professional management companies, budgets and budget studies that stretch on for pages and pages; reserve accounts into the millions.

What About Brand-New New?

With all the new construction hitting San Francisco lately buying newly built condominiums is becoming more commonplace. There are some major differences with buying new construction units versus older inventory that you should be aware of as it impacts your rights in the first few years there, a future resale. First,

  1. Buyers pay the transfer tax instead of sellers (bummer) See for more about how rates are calculated.
  2. During the condominium’s first year, any owner of the condominium benefits from a 1-year, comprehensive ‘fit and finish’ warranty from the developer that covers nearly every system and aspect of the condominium’s construction and materials from defect or damage (apart from normal wear and tear)
  3. After the first year, the Right to Repair law kicks in. The warranty is commonly referred to SB 800, see below.
  4. In San Francisco, the original buyers must pay the county transfer tax when they buy and when sell (double bummer)

A Right to Repair, It’s Not Your Right However, It’s Theirs — SB 800: California’s Right to Repair Act

California’s Legislature enacted Senate Bill 800 —the Right to Repair Act— in 2003 which applies to newly-built condo and single-family home construction built since then. SB 800 is an attempt to create a comprehensive regulatory scheme to handle construction defects for the first 10 years of a building’s life (along with the 1-year fit and finish warranty for new construction only). Instead of having to sue to get construction defects repaired initially, this system is meant to give developers a right to repair issues first before suing at first. SB 800 works well when the parties are engaged and the repair costs reasonable; it’s less effective when repairs and issues are more extensive and expensive. The system is confusing however and not every developer will opt to abide by the system given extra disclosure and legal requirements.     

Is It Chilly in Here? Is the Condo Building in Litigation? Can I Still Buy? The chilling effect of construction defect litigation…

Construction-defect issues occur in a fair number of large residential buildings in the city. Does it mean all a building’s work is shoddy? Or that the builders are evil or lazy? Or is it lawyers being greedy?  Not necessarily. With so many moving parts it takes to building these buildings — subcontractors, tradespeople, change orders and general chaos over two years — sometimes isolated mistakes or bad luck will happen despite best everyone’s efforts. Oftentimes, pending litigation in a building will create a chilling effect on lending (and on sales) which will push sale prices down during the pendency of litigation.

Why do lender purses snap shut? When lenders lend they tend to see things in only terms of how difficult it would be to get their money back from a mortgage gone bad, which is why their mortgage is first in line. Well, a judgment award skips ahead of mortgages (along with tax liens). Banks don’t want to be left holding the bag. But there are more and more banks willing to lend on these properties for those buyers with a 30–40% down payment. Of course, after the litigation and the fixes are done, things go back to normal.

Can I buy another unit in the building? What if there are only two units?

In the case of just a pair of units: lenders usually hate this scenario but can do it. You have to expect you to put down at least 40% of the purchase price for the other unit and have a good amount of HOA reserves built up. And before you ask why you’d want to buy both (or all) of the units in a building consider that many folks will buy both units in a building and use it as a single-family house/compound/residence.

What type in insurance do you need for a condo?

Each owner should purchase an HO6 Condominium Homeowners Policy — a ‘walls-ins’ policy — to insure their own installed fixtures, personal property, loss of use with additional living expenses and/or loss of income and rental income. Coverage should track any lost assessment dues and cover the building’s overall policy deductible and, most importantly, insure for personal liability.

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