percentage interests

Ownership of Common Area.  In a condominium project, all of the common area is owned by the unit owners together, rather than by a separate entity such as the association.  This is one distinction between a condominium and a non-condo project, such as a PUD, where the association is usually the owner of the common area, and each lot owner is a member of the association.

Allocation of Ownership.  Each condominium unit must be allocated an ownership interest in the common area in one of three ways.  The ownership interests must (1) be equal, or be proportionate to either (2) the size or (3) par value of the unit.  The ownership interests are usually expressed as percentages (such as .833%), but sometimes as fractions (such as 1/120).  For example, if all of the units are allocated an equal interest in a project that has 120 units, then each unit owner owns a .833% interest in the common area.

When the sizes of the units vary by a significant degree, it may become more fair to allocate the burdens of the common area, as well as the benefits of a bigger vote, according to the size of the units because, for instance, a bigger unit may have more exterior wall and roof to maintain and its higher occupancy potential may mean more people, traffic and burden on the common area.  At that point, the ownership interests in the common area may be allocated based on the literal size of the unit (square footage), or based on a looser point system, or par value.

For an explanation of par value, see Index, par value.

Undivided.  Each unit owner owns an "undivided" ownership interest in the common area, which means the owner owns a part interest in the whole (for instance, .833% of all of the common area), rather than a whole interest in a part of the common area (rather than a 100% interest in a segment of the common area).  Put another way, if, for example, the common area is 1,000 square feet, that unit owner does not own 8.33 square feet of it, but rather owns .833% of all of it.

Statutes and Cases:

(For reference: 57-8 is the Condo Act, 57-8a is the Community Association Act, 16-6a is the Nonprofit Act)

57-8-10. Contents of declaration
57-8-3. Definitions
57-8-7. Common areas and facilities