It’s a condo . . . No, wait. Maybe not.

A frequent question for us is whether or not a property that we’re insuring is or is not a condominium. The answer is important because condominiums have different, and often more restrictive, lending rules.

In Indiana, the Horizontal Property Regime Act (HPRA) found in the Indiana Code Title 32.

Article 25 is the operative law regarding condominiums. Chapter 2, Section 7 gives two criteria for real estate to be a condominium. First, the real estate is subjected to the provisions of the HPRA by the recording of a declaration. Second, the real estate includes not only the unit itself, but an undivided percentage ownership in the common areas of the condominium. (Common areas are everything in the condominium development except the units.)

So to answer the question, we examine the title and look for recorded condominium declarations. If there isn’t one, it’s not a condominium. If there are declarations, but they don’t subject the real estate to the provision of the HPRA, then it’s not a condo. Only if there is a recorded condominium declaration that meets the requirement of the HPRA is it a condominium.

Confusion reigns in Monroe County because many properties are misclassified in various public records and on property record cards as condominiums even though they are not. It seems that someone concluded that any building that is not single family detached is a condominium, as if it could only be one or the other. Condominiums are created by legal distinctions, not by characteristics of the physical nature of the improvements. Out-of-town appraisers are frequently the victims of this misinformation which mucks up their appraisals.

In fact, there are a number of developments in Bloomington that are attached row houses that are not condominiums. In the typical situation, there is a building envelope including the land and the improvements which the owner owns in fee just like a single-family home in a subdivision. These developments have common areas (often the land between the building envelope and the street) that are owned by a homeowner’s association. These common areas are not owned in percentages by all the unit owners. The unit owners instead have easement rights over the common areas.

The confusion is heightened in Monroe County because there are some developments that are not condominiums, but the building and land owned is erroneously described as a unit. There are also developments that predate the HPRA (Hyde Park Condominiums, for example) that may or may not be a condominium.