WEBVTT 00:00:00.000 --> 00:00:02.480 You know, I was looking at a real estate listing 00:00:02.480 --> 00:00:05.280 the other day for a unit in a high -rise downtown. 00:00:05.580 --> 00:00:07.540 Right. And it was all pretty standard stuff, 00:00:07.759 --> 00:00:10.179 you know, granite countertops, gym access, the 00:00:10.179 --> 00:00:13.439 usual marketing gloss. But then, for the sake 00:00:13.439 --> 00:00:16.960 of this deep dive, I actually pulled the legal 00:00:16.960 --> 00:00:19.480 description of the property, the deed itself. 00:00:19.940 --> 00:00:22.620 Ah, the fun part. The really fun part. And I 00:00:22.620 --> 00:00:25.160 realized something, well, something strange. 00:00:25.600 --> 00:00:28.760 It didn't describe a building. At all. Yeah. 00:00:28.859 --> 00:00:31.260 It didn't even describe a plot of land in the 00:00:31.260 --> 00:00:34.140 traditional sense. It described a set of coordinates 00:00:34.140 --> 00:00:36.759 in space. Right. It describes a volumetric space, 00:00:37.000 --> 00:00:39.780 a specific cube of air suspended somewhere above 00:00:39.780 --> 00:00:42.380 the earth. A cube of air. Exactly. And it just 00:00:42.380 --> 00:00:44.500 it hit me that when we use the word condominium, 00:00:44.500 --> 00:00:47.299 we all picture a specific type of architecture. 00:00:47.539 --> 00:00:49.780 You know, a glass tower, maybe with a balcony. 00:00:49.820 --> 00:00:51.880 Sure. A high rise. But we aren't describing architecture 00:00:51.880 --> 00:00:55.030 at all. We're describing a legal fiction. A legal 00:00:55.030 --> 00:00:57.609 trick. We're describing a way to sell something 00:00:57.609 --> 00:01:00.189 that for, I mean, for the vast majority of human 00:01:00.189 --> 00:01:02.750 history was legally impossible to sell. It is 00:01:02.750 --> 00:01:06.390 arguably one of the most clever and complicated 00:01:06.390 --> 00:01:10.129 legal hacks of the 20th century. Because if you 00:01:10.129 --> 00:01:13.150 really look at the history of property law, I 00:01:13.150 --> 00:01:14.969 mean, going back to the Romans or even English 00:01:14.969 --> 00:01:18.469 common law, the idea of slicing property horizontally 00:01:18.469 --> 00:01:22.409 is. It's a nightmare. A total nightmare. It breaks 00:01:22.409 --> 00:01:25.530 almost every default rule we have about what 00:01:25.530 --> 00:01:27.849 ownership even means. Because land is supposed 00:01:27.849 --> 00:01:30.049 to be infinite, right? Yeah. Vertically speaking. 00:01:30.310 --> 00:01:33.109 Precisely. This is the ad coelum doctrine. The 00:01:33.109 --> 00:01:41.290 full Latin maxim is, and I love this, Okay, you've 00:01:41.290 --> 00:01:42.890 got to translate that one for us. It translates 00:01:42.890 --> 00:01:49.819 to, Which is just a fantastic mental image. So 00:01:49.819 --> 00:01:52.019 if I own a little plot of dirt, I also own the 00:01:52.019 --> 00:01:54.519 satellites passing overhead and I guess the magma 00:01:54.519 --> 00:01:56.840 in the core of the earth below me. Theoretically, 00:01:56.840 --> 00:01:59.299 yes. That is the default setting of Western property 00:01:59.299 --> 00:02:02.540 law. Ownership is a vertical shaft. So under 00:02:02.540 --> 00:02:05.099 that ancient system, a high rise apartment building 00:02:05.099 --> 00:02:07.120 where different people own individual floors 00:02:07.120 --> 00:02:10.560 is just it's a legal impossibility. Well, if 00:02:10.560 --> 00:02:12.840 I sell you the second floor, I'm technically 00:02:12.840 --> 00:02:14.620 violating the rights of the guy on the first 00:02:14.620 --> 00:02:18.300 floor who, by definition, owns the sky above 00:02:18.300 --> 00:02:21.840 his head. He owns your space. I see. So to create 00:02:21.840 --> 00:02:24.860 what we now call a condominium, society essentially 00:02:24.860 --> 00:02:28.180 had to invent a whole new legal regime that just 00:02:28.180 --> 00:02:30.939 suspends that ancient law. You have to override 00:02:30.939 --> 00:02:34.039 it. We had to create a system where you can own 00:02:34.039 --> 00:02:36.560 a fee simple title, which is the strongest form 00:02:36.560 --> 00:02:39.180 of ownership there is, to a box of air that's 00:02:39.180 --> 00:02:40.979 just hovering 50 feet off the ground. And to 00:02:40.979 --> 00:02:42.780 make that work, you don't just need a builder 00:02:42.780 --> 00:02:45.759 and some concrete. You need a master deed. You 00:02:45.759 --> 00:02:48.539 need a legal document that in effect rewrites 00:02:48.539 --> 00:02:51.319 the laws of physics for that one specific plot 00:02:51.319 --> 00:02:53.800 of land. And that is the mission for this deep 00:02:53.800 --> 00:02:55.939 dive. We're going to unpack this invisible structure. 00:02:56.020 --> 00:02:57.460 We're going to look at what you actually own 00:02:57.460 --> 00:03:00.099 when you buy a condo. And spoiler alert, it is 00:03:00.099 --> 00:03:02.759 significantly weirder than most buyers realize. 00:03:02.979 --> 00:03:04.240 Oh, much weirder. We're going to look at the 00:03:04.240 --> 00:03:06.479 surprising history. which, believe it or not, 00:03:06.599 --> 00:03:10.020 involves 19th century geopolitical border disputes, 00:03:10.259 --> 00:03:12.740 not just housing. And then we're going to take 00:03:12.740 --> 00:03:15.800 a global tour to see how this concept of joint 00:03:15.800 --> 00:03:19.000 dominion shapes lives from Scandinavia to Singapore. 00:03:19.259 --> 00:03:21.639 And it really is global. It shapes how millions 00:03:21.639 --> 00:03:23.620 and millions of people live, how they interact 00:03:23.620 --> 00:03:25.560 with their neighbors, and effectively how they 00:03:25.560 --> 00:03:27.860 govern themselves in these tiny little micro 00:03:27.860 --> 00:03:30.560 societies. So let's start with the basics. Segment 00:03:30.560 --> 00:03:33.930 one. What do you actually own? Because I think 00:03:33.930 --> 00:03:36.050 the average person, myself included before this, 00:03:36.210 --> 00:03:39.930 equates buying a condo with buying a house, just, 00:03:40.030 --> 00:03:42.930 you know, smaller. But legally, they're not even 00:03:42.930 --> 00:03:44.990 the same species. They are completely different 00:03:44.990 --> 00:03:47.009 animals entirely. When you buy a single family 00:03:47.009 --> 00:03:48.689 home, you get the whole package. You get the 00:03:48.689 --> 00:03:51.610 land, the house, the dirt, the sky, simple. The 00:03:51.610 --> 00:03:53.270 whole vertical shaft. The whole vertical shaft 00:03:53.270 --> 00:03:55.870 from heaven to hell. But when you buy a condo, 00:03:55.870 --> 00:03:58.949 you're purchasing two very specific, very different 00:03:58.949 --> 00:04:00.889 things at the same time. First, you are buying 00:04:00.889 --> 00:04:04.379 the unit. Box of air. The box of air. But we 00:04:04.379 --> 00:04:06.360 need to be really precise here because this is 00:04:06.360 --> 00:04:09.060 where all the confusion starts. In a typical 00:04:09.060 --> 00:04:12.300 residential condo declaration, your ownership 00:04:12.300 --> 00:04:15.439 is often defined as the airspace within the boundaries 00:04:15.439 --> 00:04:17.800 of the home. So if you're standing in your living 00:04:17.800 --> 00:04:20.519 room and you reach out and touch the wall. I 00:04:20.519 --> 00:04:22.560 own the wall. Right. That's my wall. Usually, 00:04:22.579 --> 00:04:25.790 no. You own the paint. And you own everything 00:04:25.790 --> 00:04:28.550 inward from the paint. Just the paint? The paint, 00:04:28.569 --> 00:04:30.589 maybe the top layer of skim -coated plaster. 00:04:30.750 --> 00:04:33.490 You own the air, the internal partition walls 00:04:33.490 --> 00:04:35.689 that aren't holding up the building, the cabinets, 00:04:35.910 --> 00:04:38.990 the flooring. But the wall itself, the drywall, 00:04:39.149 --> 00:04:41.589 the studs, the insulation, the exterior brick, 00:04:41.810 --> 00:04:44.470 you do not own that individually. Wait, let's 00:04:44.470 --> 00:04:45.870 just pause on that for a second because that 00:04:45.870 --> 00:04:48.870 has huge implications. If I decide I want to 00:04:48.870 --> 00:04:50.910 drill a hole in the wall to hang a heavy mirror 00:04:50.910 --> 00:04:54.730 and I hit a stud. I am technically drilling into 00:04:54.730 --> 00:04:57.629 property I don't exclusively own. Technically, 00:04:57.769 --> 00:05:00.470 yes. You are altering what are called the common 00:05:00.470 --> 00:05:03.850 elements or common areas. Now, in practice, of 00:05:03.850 --> 00:05:05.709 course, the governing documents will usually 00:05:05.709 --> 00:05:07.889 allow for reasonable use, like hanging pictures. 00:05:08.170 --> 00:05:10.449 No one's going to sue you for that. But what 00:05:10.449 --> 00:05:12.949 if you wanted to knock that wall down to create 00:05:12.949 --> 00:05:16.389 a big open plan kitchen? Right, a common renovation. 00:05:16.790 --> 00:05:18.790 You can't just do it. Even if an engineer tells 00:05:18.790 --> 00:05:22.089 you it's not load -bearing. That wall might be 00:05:22.089 --> 00:05:24.509 the legal boundary of your property as defined 00:05:24.509 --> 00:05:27.089 in the deed. You might be destroying property 00:05:27.089 --> 00:05:29.389 that belongs to the association, to everyone. 00:05:29.629 --> 00:05:31.930 That's incredible. So this brings us to the second 00:05:31.930 --> 00:05:34.589 thing you buy. You get the box of air and you 00:05:34.589 --> 00:05:37.550 buy a share of... Everything else. The common 00:05:37.550 --> 00:05:39.870 areas. Correct. The lobby, the elevators, the 00:05:39.870 --> 00:05:42.810 roof, the land, the building sits on, the gym, 00:05:42.990 --> 00:05:45.550 the pool, the pipes running inside the walls, 00:05:45.730 --> 00:05:48.230 the wiring, all of it. These are owned by everyone 00:05:48.230 --> 00:05:50.050 together. But how does that ownership actually 00:05:50.050 --> 00:05:53.230 work in practice? I mean, do I own, say, three 00:05:53.230 --> 00:05:55.149 specific square feet of the roof? Can I go up 00:05:55.149 --> 00:05:56.750 there with a lawn chair and a cooler and say, 00:05:56.829 --> 00:05:59.350 this patch of shingles right here is mine. Everyone 00:05:59.350 --> 00:06:01.709 else get off. No. And that's the crucial legal 00:06:01.709 --> 00:06:04.250 distinction. It's called an undivided ownership 00:06:04.250 --> 00:06:07.509 interest. Think of it this way. If you and I 00:06:07.509 --> 00:06:10.329 own a racehorse together, you don't own the front 00:06:10.329 --> 00:06:12.629 legs and I own the back legs. That would be a 00:06:12.629 --> 00:06:15.029 very slow horse. It would be a very difficult 00:06:15.029 --> 00:06:17.689 horse to manage. We both own a percentage, say, 00:06:17.750 --> 00:06:20.670 50 % of the entire horse. You can't just decide 00:06:20.670 --> 00:06:23.050 to cut off a leg and sell it, because I own 50 00:06:23.050 --> 00:06:25.990 % of that leg too. I've heard the pie analogy 00:06:25.990 --> 00:06:28.949 used here. Does that work? The pie analogy is 00:06:28.949 --> 00:06:31.790 useful, but we have to tweak it a bit. In a condo, 00:06:31.829 --> 00:06:34.910 you own one specific slice of the pie exclusively. 00:06:36.009 --> 00:06:38.389 That's your unit. It's yours. You can eat it. 00:06:38.430 --> 00:06:40.490 You can decorate it. You can, I guess, burn it 00:06:40.490 --> 00:06:42.569 if you want. It feels a little extreme. A little 00:06:42.569 --> 00:06:45.170 extreme, but legally, it's your slice. But the 00:06:45.170 --> 00:06:47.930 crust, the pan, and the oven that baked the pie, 00:06:48.110 --> 00:06:49.990 those are owned by everyone who has a slice. 00:06:50.149 --> 00:06:52.610 You all own the crust and the pan together as 00:06:52.610 --> 00:06:54.870 what's legally called tenants in common. And 00:06:54.870 --> 00:06:57.740 because we all own the crust together, If the 00:06:57.740 --> 00:07:01.199 crust cracks, we all have to pay to fix it. Precisely. 00:07:01.199 --> 00:07:03.639 And this is where the legal reality hits the 00:07:03.639 --> 00:07:06.420 wallet. This is the entire reason that condo 00:07:06.420 --> 00:07:09.360 fees or assessments or levies exist. You are 00:07:09.360 --> 00:07:11.779 collectively maintaining the common elements. 00:07:12.040 --> 00:07:14.540 So if the roof leaks over the penthouse unit 00:07:14.540 --> 00:07:16.899 on the top floor. The guy on the ground floor 00:07:16.899 --> 00:07:18.699 still has to pay. The guy on the ground floor 00:07:18.699 --> 00:07:21.180 has to pay his share to fix it, even though the 00:07:21.180 --> 00:07:23.120 water isn't dripping anywhere near his head, 00:07:23.240 --> 00:07:26.740 because he owns, let's say, 0 .5 % of that roof. 00:07:26.899 --> 00:07:29.040 That seems fair, I guess, but it also seems like 00:07:29.040 --> 00:07:32.839 a recipe for constant conflict. Who defines where 00:07:32.839 --> 00:07:36.139 my unit, my slice of pie ends and the common 00:07:36.139 --> 00:07:39.139 area? The crust begins. Is it the paint? The 00:07:39.139 --> 00:07:41.660 drywall? the center of the wall stud it is all 00:07:41.660 --> 00:07:43.980 defined in the declaration it can also be called 00:07:43.980 --> 00:07:46.459 the master deed or the enabling declaration depending 00:07:46.459 --> 00:07:49.459 on the state this document is the absolute dna 00:07:49.459 --> 00:07:52.540 of the building it's a massive dense legal document 00:07:52.540 --> 00:07:54.279 that gets filed with the local government before 00:07:54.279 --> 00:07:56.420 the first unit is ever sold and it literally 00:07:56.420 --> 00:07:59.399 draws those lines it draws those invisible lines 00:07:59.399 --> 00:08:02.180 in three -dimensional space It will say something 00:08:02.180 --> 00:08:05.779 like, Unit 101 consists of the space between 00:08:05.779 --> 00:08:09.839 elevation X and elevation Y bounded by the interior 00:08:09.839 --> 00:08:12.579 undecorated surfaces of the perimeter walls. 00:08:13.399 --> 00:08:16.060 It's incredibly specific. It sounds like a constitution 00:08:16.060 --> 00:08:19.279 for a tiny micronation. It effectively is. And 00:08:19.279 --> 00:08:21.699 just like a constitution, it is incredibly hard 00:08:21.699 --> 00:08:25.139 to change. To amend a master deed, you often 00:08:25.139 --> 00:08:27.759 need a super majority vote of all the owners, 00:08:28.000 --> 00:08:30.579 sometimes 67 percent, sometimes as high as 100 00:08:30.579 --> 00:08:32.360 percent. 100 percent. You'll never get that. 00:08:32.460 --> 00:08:34.639 You'll almost never get it. And on top of that, 00:08:34.799 --> 00:08:36.759 you often need the approval of all the mortgage 00:08:36.759 --> 00:08:39.500 lenders who have loans in the building. It is, 00:08:39.559 --> 00:08:42.159 for all intents and purposes, set in stone. OK, 00:08:42.259 --> 00:08:43.799 but then you have all the other documents. People 00:08:43.799 --> 00:08:46.379 talk about the bylaws, the rules and regs. I 00:08:46.379 --> 00:08:48.159 feel like most people, myself included, just 00:08:48.159 --> 00:08:50.879 lump these all together as the HOA rules. But 00:08:50.879 --> 00:08:53.200 there's a hierarchy here, isn't there? A huge 00:08:53.200 --> 00:08:55.399 hierarchy. It's a pyramid of authority. At the 00:08:55.399 --> 00:08:57.960 very top, you have state law, the Condominium 00:08:57.960 --> 00:09:00.779 Act for your state. Nothing can violate that. 00:09:00.940 --> 00:09:03.059 Below that, you have the master deed we just 00:09:03.059 --> 00:09:06.149 talked about. That's the Constitution. It defines 00:09:06.149 --> 00:09:09.210 the property rights. Then below that, you have 00:09:09.210 --> 00:09:12.429 the bylaws. The bylaws primarily describe how 00:09:12.429 --> 00:09:15.240 the government The HOA is supposed to run itself. 00:09:15.559 --> 00:09:18.000 How many board members are there? How often they 00:09:18.000 --> 00:09:20.740 meet? How elections are held? So it's the machinery 00:09:20.740 --> 00:09:23.039 of government. Exactly. And then at the bottom 00:09:23.039 --> 00:09:25.360 of the pyramid, you have the rules and regulations. 00:09:25.779 --> 00:09:28.000 The no pink curtains rules. That's where you 00:09:28.000 --> 00:09:30.899 find the no pink curtains rules. These are often 00:09:30.899 --> 00:09:34.019 captured in a document called the CCNR's Covenants, 00:09:34.059 --> 00:09:36.559 Conditions, and Restrictions. These are really 00:09:36.559 --> 00:09:39.080 the personality of the complex. While the master 00:09:39.080 --> 00:09:41.399 deed defines the physical body of the building, 00:09:41.639 --> 00:09:45.419 the CCNR's define its behavior. So things like 00:09:45.419 --> 00:09:49.019 pets. Can you have a dog? What size? Can you 00:09:49.019 --> 00:09:51.419 rent your unit out on Airbnb? Can you park a 00:09:51.419 --> 00:09:53.259 commercial truck in the driveway? What color 00:09:53.259 --> 00:09:55.740 can you paint your front door? All of that is 00:09:55.740 --> 00:09:58.360 in the CC &Rs. And the key phrase I kept seeing 00:09:58.360 --> 00:10:00.399 in the research for this was covenants running 00:10:00.399 --> 00:10:03.340 with the land, which I have to say sounds like 00:10:03.340 --> 00:10:05.120 something out of a fantasy novel. It does sound 00:10:05.120 --> 00:10:07.879 very dramatic. But it's actually a kind of terrifying 00:10:07.879 --> 00:10:10.740 legal concept. It means the rules are attached 00:10:10.740 --> 00:10:13.200 to the property itself, not to the person who 00:10:13.200 --> 00:10:16.100 owns it. So when you buy the unit, you are automatically 00:10:16.100 --> 00:10:18.159 and legally stepping into that set of rules. 00:10:18.379 --> 00:10:20.379 You can't say, well, I didn't personally sign 00:10:20.379 --> 00:10:22.700 that rule about dog sizes. It doesn't matter. 00:10:22.940 --> 00:10:25.700 The unit itself is bound by them. You are, in 00:10:25.700 --> 00:10:27.940 essence, buying a box of air that comes with 00:10:27.940 --> 00:10:30.600 a book of laws permanently glued to it. So to 00:10:30.600 --> 00:10:34.000 recap, you're buying a box of air, a tiny percentage 00:10:34.000 --> 00:10:36.919 of a shared racehorse, and a binding contract 00:10:36.919 --> 00:10:39.000 to behave a certain way for as long as you own 00:10:39.000 --> 00:10:41.799 it. It's a very complex bundle of rights. It 00:10:41.799 --> 00:10:44.080 is. And what's so fascinating is that while this 00:10:44.080 --> 00:10:46.240 all feels like a very modern solution to urban 00:10:46.240 --> 00:10:49.200 density, the concept and even the word itself 00:10:49.200 --> 00:10:51.200 has a history that has absolutely nothing to 00:10:51.200 --> 00:10:52.840 do with housing. This was my favorite part of 00:10:52.840 --> 00:10:55.480 the prep. Segment two, the surprising origin 00:10:55.480 --> 00:10:59.100 story. Because condominium, it sounds Latin. 00:10:59.200 --> 00:11:01.039 So I just assumed the Romans must have invented 00:11:01.039 --> 00:11:03.230 it. It is Latin. You're right about that. But 00:11:03.230 --> 00:11:05.789 remember what I said earlier. The Romans hated 00:11:05.789 --> 00:11:08.669 the idea of horizontal property division. They 00:11:08.669 --> 00:11:12.070 were strict. Add Cullinan people up to the heavens, 00:11:12.090 --> 00:11:15.009 down to hell. So for them, the word condominium 00:11:15.009 --> 00:11:17.809 did not and could not describe a building. So 00:11:17.809 --> 00:11:20.169 what on earth did it mean? Just break the word 00:11:20.169 --> 00:11:23.580 down. Condi meaning together or jointly. And 00:11:23.580 --> 00:11:27.340 dominium meaning dominion or sovereignty or absolute 00:11:27.340 --> 00:11:29.799 ownership. Joint dominion. Joint dominion. That 00:11:29.799 --> 00:11:31.860 sounds political. It was entirely political. 00:11:32.080 --> 00:11:34.580 For centuries, the term condominium referred 00:11:34.580 --> 00:11:37.500 to a territory over which two or more sovereign 00:11:37.500 --> 00:11:41.679 powers shared equal rule. So a country. A shared 00:11:41.679 --> 00:11:44.740 country. The sources highlighted a specific example 00:11:44.740 --> 00:11:46.600 that most Americans probably learned about in 00:11:46.600 --> 00:11:48.259 history class, even if they don't know the specific 00:11:48.259 --> 00:11:51.919 legal term for it. The Oregon country. Right, 00:11:51.960 --> 00:11:54.200 from the Oregon Trail in the 1800s. Exactly. 00:11:54.200 --> 00:11:58.220 From 1818 until 1846, that vast territory that 00:11:58.220 --> 00:12:00.940 is now Oregon, Washington, Idaho, and parts of 00:12:00.940 --> 00:12:03.460 British Columbia wasn't strictly U .S. soil and 00:12:03.460 --> 00:12:06.059 it wasn't strictly British soil. It was, legally 00:12:06.059 --> 00:12:08.580 speaking, a condominium. I always just thought 00:12:08.580 --> 00:12:11.000 they hadn't decided whose it was yet. Like, it 00:12:11.000 --> 00:12:13.730 was just... disputed land no it's more formal 00:12:13.730 --> 00:12:15.970 than that they had a treaty the treaty of 1818 00:12:15.970 --> 00:12:19.169 it explicitly established joint usage and joint 00:12:19.169 --> 00:12:22.070 occupancy citizens of the united states and subjects 00:12:22.070 --> 00:12:24.250 of great britain could both settle there trade 00:12:24.250 --> 00:12:26.950 there and travel there freely there was no border 00:12:26.950 --> 00:12:29.429 they were sharing sovereignty because they couldn't 00:12:29.429 --> 00:12:31.210 agree on how to split it up without going to 00:12:31.210 --> 00:12:34.330 war again that is just Wild. Yeah. So the word 00:12:34.330 --> 00:12:36.590 we use for our apartment complex comes directly 00:12:36.590 --> 00:12:40.029 from a diplomatic mechanism to prevent a war 00:12:40.029 --> 00:12:42.110 between the United States and the British Empire. 00:12:42.289 --> 00:12:46.350 It's the exact same legal mechanism. Two or more 00:12:46.350 --> 00:12:48.649 entities or in a building, hundreds of entities 00:12:48.649 --> 00:12:51.210 sharing dominion over a single plot of land. 00:12:51.669 --> 00:12:54.389 And honestly, the failure of the Oregon condominium 00:12:54.389 --> 00:12:56.509 tells you a lot about why HOA board meetings 00:12:56.509 --> 00:12:59.720 can get so nasty. How so? What happened? Well, 00:12:59.799 --> 00:13:02.379 it worked great on paper. But in reality, you 00:13:02.379 --> 00:13:04.480 had two groups with completely different goals. 00:13:04.679 --> 00:13:06.919 You had the Hudson's Bay Company, which was British, 00:13:07.100 --> 00:13:10.279 and their entire goal was to monopolize the fur 00:13:10.279 --> 00:13:13.039 trade. They wanted to keep the area wild. And 00:13:13.039 --> 00:13:15.299 then you had the American settlers pouring in 00:13:15.299 --> 00:13:17.820 over the Oregon Trail. Their goal was to farm. 00:13:18.320 --> 00:13:21.059 They wanted to clear the land, build towns, and 00:13:21.059 --> 00:13:23.500 establish a different kind of economy. They had 00:13:23.500 --> 00:13:25.519 different legal traditions, different cultures, 00:13:25.639 --> 00:13:28.860 different economic goals. The friction just became 00:13:28.860 --> 00:13:31.559 unbearable. It's the classic tragedy of the commons. 00:13:31.559 --> 00:13:34.299 Exactly. Joint dominion only works if everyone 00:13:34.299 --> 00:13:37.100 can agree on how to use the dominion. By the 00:13:37.100 --> 00:13:40.279 early 1840s, the friction was too high, the goals 00:13:40.279 --> 00:13:43.039 were too different, so they gave up on the condominium 00:13:43.039 --> 00:13:46.100 model, and they finally drew a line, the 49th 00:13:46.100 --> 00:13:47.909 parallel, which is now the border. border with 00:13:47.909 --> 00:13:50.730 Canada, they split the asset. Which is the one 00:13:50.730 --> 00:13:53.350 thing you can't do in a high rise building. You 00:13:53.350 --> 00:13:54.990 can't just draw a line down the middle of the 00:13:54.990 --> 00:13:57.570 elevator shaft and say, OK, the British on the 00:13:57.570 --> 00:13:59.730 left side and the Americans on the right. Right. 00:13:59.809 --> 00:14:02.230 You are permanently forced to remain in the condominium. 00:14:02.330 --> 00:14:04.549 That is why the governance structure is so critical 00:14:04.549 --> 00:14:07.009 and so often stressed to its breaking point. 00:14:07.110 --> 00:14:10.029 OK, so this debunks the Roman myth. It was widely 00:14:10.029 --> 00:14:12.590 reported in the 1960s, wasn't it, that this was 00:14:12.590 --> 00:14:15.220 a Roman idea? It was. A lot of the early marketing 00:14:15.220 --> 00:14:17.820 materials for condos in the U .S. tried to give 00:14:17.820 --> 00:14:20.399 it this ancient classical pedigree. They'd say 00:14:20.399 --> 00:14:22.419 this is based on a Roman model, but it's just 00:14:22.419 --> 00:14:25.240 not true. The concept of an estate in the air 00:14:25.240 --> 00:14:27.720 was completely antithetical to Roman law. So 00:14:27.720 --> 00:14:30.230 if the Romans didn't do it. and the Oregon country 00:14:30.230 --> 00:14:32.909 was a political thing, when did condominium actually 00:14:32.909 --> 00:14:35.149 become a housing term? How did it get to the 00:14:35.149 --> 00:14:37.909 U .S.? It's surprisingly recent. The concept 00:14:37.909 --> 00:14:40.529 of owning floors separately existed in pockets 00:14:40.529 --> 00:14:43.330 of medieval Europe, usually in dense, walled 00:14:43.330 --> 00:14:45.509 cities where space was at an absolute premium. 00:14:45.789 --> 00:14:48.950 But it never really had a formal, modern, legal 00:14:48.950 --> 00:14:51.649 framework. The modern condominium law actually 00:14:51.649 --> 00:14:53.950 entered the United States via the Caribbean. 00:14:54.110 --> 00:14:56.360 The Caribbean, not Europe. Nope. Puerto Rico 00:14:56.360 --> 00:14:58.440 passed what it called a Horizontal Property Act 00:14:58.440 --> 00:15:01.379 in 1958. They were facing a housing shortage. 00:15:01.480 --> 00:15:04.240 They needed density. And their legal system has 00:15:04.240 --> 00:15:07.480 roots in Spanish civil law, which was more flexible 00:15:07.480 --> 00:15:09.700 on this issue than English common law was. So 00:15:09.700 --> 00:15:11.419 they were the pioneers in the U .S. context. 00:15:11.600 --> 00:15:14.100 1958, that is. That's yesterday in legal terms. 00:15:14.240 --> 00:15:17.100 It's brand new. And from Puerto Rico, it jumped 00:15:17.100 --> 00:15:20.360 to the mainland. And here is a great trivia question 00:15:20.360 --> 00:15:24.429 for you. Where was the very first condominium 00:15:24.429 --> 00:15:27.409 built in the continental United States? You'd 00:15:27.409 --> 00:15:30.629 probably guess New York, Chicago, maybe Miami. 00:15:30.649 --> 00:15:33.230 I would absolutely guess New York City. High 00:15:33.230 --> 00:15:37.090 density, ridiculously expensive land. Seems like 00:15:37.090 --> 00:15:39.820 the obvious place. It's the logical guess. But 00:15:39.820 --> 00:15:42.000 you would be wrong. It was Salt Lake City, Utah 00:15:42.000 --> 00:15:46.039 in 1960. Utah? No way. Why on earth Utah? It's 00:15:46.039 --> 00:15:48.799 a bit of a historical anomaly. Utah passed a 00:15:48.799 --> 00:15:51.080 version of the condo law very, very early on. 00:15:51.220 --> 00:15:53.220 Some historians speculate it might have been 00:15:53.220 --> 00:15:55.139 influenced by the Mormon history of cooperative 00:15:55.139 --> 00:15:57.059 living and community planning, though that's 00:15:57.059 --> 00:15:59.360 not proven. But for whatever reason, they had 00:15:59.360 --> 00:16:01.240 the legal framework on the books and a developer 00:16:01.240 --> 00:16:03.360 was ready to go. But just because it's legal 00:16:03.360 --> 00:16:05.669 doesn't mean people will buy it. And more importantly, 00:16:05.809 --> 00:16:07.549 it doesn't mean banks will lend money for it. 00:16:07.570 --> 00:16:09.669 They must have been terrified. You want a mortgage 00:16:09.669 --> 00:16:12.970 for a box of air. That was a huge bottleneck. 00:16:13.289 --> 00:16:16.210 Banks understand land. If you default on a house 00:16:16.210 --> 00:16:18.769 loan, they can foreclose and take the land. Land 00:16:18.769 --> 00:16:21.909 has value. But how do you repossess a slice of 00:16:21.909 --> 00:16:24.409 sky 50 feet up? It was considered incredibly 00:16:24.409 --> 00:16:26.980 high risk. The catalyst that changed everything 00:16:26.980 --> 00:16:29.399 that blew the doors open was the federal government. 00:16:29.559 --> 00:16:31.980 Of course. Always follow the money. Specifically, 00:16:32.179 --> 00:16:35.200 it was the Housing Act of 1961, Section 234. 00:16:35.500 --> 00:16:37.879 This new provision allowed the Federal Housing 00:16:37.879 --> 00:16:41.159 Administration, the FHA, to insure mortgages 00:16:41.159 --> 00:16:44.620 on condominiums. Ah, okay. So the government 00:16:44.620 --> 00:16:46.960 basically said to the banks, don't worry, if 00:16:46.960 --> 00:16:49.039 this borrower defaults on their loan for this 00:16:49.039 --> 00:16:52.850 weird box of air, we will cover your loss. Exactly. 00:16:53.009 --> 00:16:55.129 It completely de -risked the asset class overnight. 00:16:55.269 --> 00:16:57.529 Suddenly, capital flooded into the market. Developers 00:16:57.529 --> 00:16:59.230 could get loans. Buyers could get mortgages. 00:16:59.450 --> 00:17:02.809 And by 1969, just eight years later, every single 00:17:02.809 --> 00:17:05.230 state in the U .S. had passed its own condo laws. 00:17:05.430 --> 00:17:08.450 We went from basically zero to ubiquitous in 00:17:08.450 --> 00:17:11.470 less than a single decade. That explains so much. 00:17:11.470 --> 00:17:13.789 It explains why so many of those, you know, brutalist 00:17:13.789 --> 00:17:16.329 concrete condo buildings seem to date from the 00:17:16.329 --> 00:17:18.890 late 60s and early 70s. It was a gold rush. It 00:17:18.890 --> 00:17:21.430 absolutely was. It allowed developers to stack 00:17:21.430 --> 00:17:24.150 homes vertically, multiplying the potential value 00:17:24.150 --> 00:17:27.029 of a single plot of land by 50 or 100 times. 00:17:27.450 --> 00:17:30.190 But in doing so, it also created this entirely 00:17:30.190 --> 00:17:33.509 new social organism. Because once you stack all 00:17:33.509 --> 00:17:35.470 those people on top of each other, you need a 00:17:35.470 --> 00:17:37.710 government to run the stack. Which brings us 00:17:37.710 --> 00:17:40.690 perfectly to segment three, the governance machine, 00:17:40.930 --> 00:17:45.089 the dreaded or beloved HOA. The Homeowners Association. 00:17:45.329 --> 00:17:48.259 If the condominium is the joint dominion. The 00:17:48.259 --> 00:17:51.019 HOA is the government of that dominion. And we 00:17:51.019 --> 00:17:53.000 are just using government as a metaphor here, 00:17:53.059 --> 00:17:55.059 are we? I mean, they have powers that really 00:17:55.059 --> 00:17:57.400 do rival actual municipalities. They absolutely 00:17:57.400 --> 00:17:59.640 do. Think about what a basic city government 00:17:59.640 --> 00:18:02.440 does. It taxes you property taxes to pay for 00:18:02.440 --> 00:18:05.220 roads, police, and sanitation. It passes laws, 00:18:05.339 --> 00:18:08.200 ordinances to regulate behavior. And it enforces 00:18:08.200 --> 00:18:11.039 those laws with fines or other penalties. And 00:18:11.039 --> 00:18:13.519 HOA does the exact same things, just on a smaller 00:18:13.519 --> 00:18:15.799 scale. Okay, so they tax you through the assessments 00:18:15.799 --> 00:18:18.900 or HOA fees. Right. And they have the legal power 00:18:18.900 --> 00:18:21.259 to collect those taxes. If you don't pay your 00:18:21.259 --> 00:18:23.400 property tax, the city can eventually take your 00:18:23.400 --> 00:18:25.740 house. In many, many states, if you don't pay 00:18:25.740 --> 00:18:29.160 your HOA fees, the HOA can place a lien on your 00:18:29.160 --> 00:18:31.099 unit and foreclose on it. They can take your 00:18:31.099 --> 00:18:33.599 home. They can literally take your home to pay 00:18:33.599 --> 00:18:35.720 for your share of the unpaid pool maintenance 00:18:35.720 --> 00:18:38.200 or landscaping costs. That is the part that I 00:18:38.200 --> 00:18:40.660 think really scares people. You can be completely 00:18:40.660 --> 00:18:42.980 up to date on your mortgage. You can own your 00:18:42.980 --> 00:18:46.000 unit free and clear. But you can still lose your 00:18:46.000 --> 00:18:48.299 house because you fell behind on paying for the 00:18:48.299 --> 00:18:51.180 shared expenses. It happens because going back 00:18:51.180 --> 00:18:54.099 to that undivided interest concept, if you don't 00:18:54.099 --> 00:18:55.799 pay your share, your neighbors have to pay it 00:18:55.799 --> 00:18:59.119 for you. The building solvency, its ability to 00:18:59.119 --> 00:19:01.500 pay its insurance and its water bill depends 00:19:01.500 --> 00:19:04.380 on that collective contribution. So the law gives 00:19:04.380 --> 00:19:07.039 them very strong enforcement powers. But the 00:19:07.039 --> 00:19:09.980 real friction, the stories you always hear, usually 00:19:09.980 --> 00:19:12.440 isn't about the money for the roof. It's about 00:19:12.440 --> 00:19:14.680 the control. It's about those bylaws and rules 00:19:14.680 --> 00:19:17.579 we mentioned earlier. This is the mini -municipality 00:19:17.579 --> 00:19:21.119 aspect in its purest form. The board of directors, 00:19:21.339 --> 00:19:23.220 which is the executive branch of this little 00:19:23.220 --> 00:19:26.240 government, is elected by the owners. They're 00:19:26.240 --> 00:19:28.890 your neighbors. They're Bob from 3B and Susan 00:19:28.890 --> 00:19:31.569 from the penthouse. Right. But once they are 00:19:31.569 --> 00:19:34.470 elected, they have the power to enforce the rules 00:19:34.470 --> 00:19:37.990 and, in some cases, create new ones that regulate 00:19:37.990 --> 00:19:40.329 the aesthetics and behavior of the entire community. 00:19:40.690 --> 00:19:42.450 And this is where we get the horror stories, 00:19:42.609 --> 00:19:46.269 the stories of petty tyranny. The board member 00:19:46.269 --> 00:19:48.990 who goes around with a ruler measuring the height 00:19:48.990 --> 00:19:51.690 of everyone's lawn. It's a structural problem. 00:19:51.910 --> 00:19:53.950 In a real city government, you have checks and 00:19:53.950 --> 00:19:56.089 balances. You have a professional civil service, 00:19:56.170 --> 00:19:57.910 a press corps watching what they do, an opposition 00:19:57.910 --> 00:20:01.069 party. In a condo, the board is just a handful 00:20:01.069 --> 00:20:03.369 of volunteers. They might have zero experience 00:20:03.369 --> 00:20:06.269 in management, law, or finance, but they suddenly 00:20:06.269 --> 00:20:08.970 have immense power over your daily life and the 00:20:08.970 --> 00:20:11.049 value of your largest asset. Now, we've been 00:20:11.049 --> 00:20:13.089 talking almost exclusively about residential 00:20:13.089 --> 00:20:15.609 condos, but the outline points out something 00:20:15.609 --> 00:20:18.309 crucial. Condominium is just a legal wrapper. 00:20:18.509 --> 00:20:20.869 You can wrap basically anything in it. Anything. 00:20:21.049 --> 00:20:23.390 You can condo a parking lot where each person 00:20:23.390 --> 00:20:26.250 owns their specific parking space. You can condo 00:20:26.250 --> 00:20:29.329 boat slip at a marina. You can condo office space. 00:20:29.630 --> 00:20:31.309 A shopping mall was the one that blew my mind. 00:20:31.430 --> 00:20:33.930 Shopping malls are a great example of commercial 00:20:33.930 --> 00:20:37.630 condos. Imagine you're a big retailer like The 00:20:37.630 --> 00:20:40.910 Gap or Starbucks. You don't necessarily want 00:20:40.910 --> 00:20:43.029 to rent from a landlord forever. You want to 00:20:43.029 --> 00:20:45.369 own your real estate to control your costs and 00:20:45.369 --> 00:20:48.470 build equity. But you can't buy just the store 00:20:48.470 --> 00:20:50.950 because it's physically attached to a massive, 00:20:51.029 --> 00:20:53.710 complex building. So the mall gets turned into 00:20:53.710 --> 00:20:56.609 a condo. The individual stores are the units 00:20:56.609 --> 00:20:59.609 and the walkways, the food court, the parking 00:20:59.609 --> 00:21:02.200 lot. Those are the common elements. Exactly. 00:21:02.220 --> 00:21:05.200 And all the businesses pay fees to maintain the 00:21:05.200 --> 00:21:07.619 atrium and pay the security guards, just like 00:21:07.619 --> 00:21:09.500 residents in a building pay for a lobby and a 00:21:09.500 --> 00:21:12.880 doorman. But there's a specific and very serious 00:21:12.880 --> 00:21:15.440 risk with commercial condos that the research 00:21:15.440 --> 00:21:17.279 highlights. It's called the holdout problem. 00:21:17.440 --> 00:21:19.380 The holdout problem. What's that? Well, commercial 00:21:19.380 --> 00:21:22.559 needs change fast. A shopping mall that was built 00:21:22.559 --> 00:21:25.789 in 1980 might be obsolete today. The community 00:21:25.789 --> 00:21:27.910 might desperately need it to be torn down and 00:21:27.910 --> 00:21:30.349 turned into an Amazon distribution center or 00:21:30.349 --> 00:21:33.670 a block of apartments. If one single landlord 00:21:33.670 --> 00:21:36.430 owned that whole mall, they could just make the 00:21:36.430 --> 00:21:38.529 business decision to knock it down and redevelop 00:21:38.529 --> 00:21:41.549 it. But if the mall is a condominium with 50 00:21:41.549 --> 00:21:44.089 different store owners. You need to get all 50 00:21:44.089 --> 00:21:47.099 of them to agree to sell. Right. And what if 00:21:47.099 --> 00:21:48.700 one of them, let's say it's the guy who owns 00:21:48.700 --> 00:21:51.579 the little pretzel shop, refuses to sell? Or 00:21:51.579 --> 00:21:54.500 what if he demands 10 times the market value 00:21:54.500 --> 00:21:56.880 for his unit? The whole multi -billion dollar 00:21:56.880 --> 00:21:59.519 redevelopment is blocked. It's blocked. The rigid 00:21:59.519 --> 00:22:02.000 legal structure of the condominium, which was 00:22:02.000 --> 00:22:04.720 designed for stability, can freeze a property 00:22:04.720 --> 00:22:07.779 in time, making it incredibly hard to adapt to 00:22:07.779 --> 00:22:10.140 changing economic realities. That is fascinating. 00:22:10.259 --> 00:22:12.480 The legal structure that enables the initial 00:22:12.480 --> 00:22:14.920 development can actually paralyze it 50 years 00:22:14.920 --> 00:22:17.140 later. It's a huge, huge problem, especially 00:22:17.140 --> 00:22:19.960 with aging commercial and even residential condo 00:22:19.960 --> 00:22:21.940 buildings. And we see another strange variation 00:22:21.940 --> 00:22:24.900 of this with something called detached condos. 00:22:25.000 --> 00:22:28.319 Oh, I've seen these. They look exactly like regular 00:22:28.319 --> 00:22:31.160 suburban houses. Picket fence, a little yard, 00:22:31.359 --> 00:22:34.099 no shared walls. But the listing says it's a 00:22:34.099 --> 00:22:36.809 condo. I've never understood why. It's usually 00:22:36.809 --> 00:22:40.210 a developer loophole related to zoning. The local 00:22:40.210 --> 00:22:43.029 zoning laws might say, on this 10 -acre plot, 00:22:43.309 --> 00:22:45.589 you can only build 20 single -family houses. 00:22:46.170 --> 00:22:48.829 But the state condo laws, which are separate, 00:22:49.009 --> 00:22:51.849 might allow for higher density. So the developer 00:22:51.849 --> 00:22:55.309 builds 40 houses, calls them site condos, and 00:22:55.309 --> 00:22:57.910 legally designates all the yards and roads as 00:22:57.910 --> 00:23:00.710 common elements. So I buy the house. It looks 00:23:00.710 --> 00:23:03.329 like my own house. but i don't actually own the 00:23:03.329 --> 00:23:06.490 grass in my own backyard legally no you own the 00:23:06.490 --> 00:23:09.650 house itself the unit and the hoa which is all 00:23:09.650 --> 00:23:11.789 the homeowners together owns the grass this is 00:23:11.789 --> 00:23:13.509 why you often see those communities where the 00:23:13.509 --> 00:23:16.150 landscaping is absolutely identical from house 00:23:16.150 --> 00:23:17.990 to house because the owner can't mow their own 00:23:17.990 --> 00:23:20.910 lawn or plant their own flowers exactly the hoa 00:23:20.910 --> 00:23:23.539 does it all to maintain a uniform look It's a 00:23:23.539 --> 00:23:25.880 way to sell the single family home dream with 00:23:25.880 --> 00:23:28.720 the maintenance free lifestyle promise. But what 00:23:28.720 --> 00:23:31.359 you're really sacrificing is autonomy over your 00:23:31.359 --> 00:23:34.119 own property. It just really reinforces the main 00:23:34.119 --> 00:23:37.519 point over and over again. Condominium is a legal 00:23:37.519 --> 00:23:40.339 status. It is not a building type. It is 100 00:23:40.339 --> 00:23:43.059 percent illegal status. OK, let's zoom out. We've 00:23:43.059 --> 00:23:46.119 been very, very U .S. centric so far. But this 00:23:46.119 --> 00:23:49.400 is a global phenomenon. And as we move into segment 00:23:49.400 --> 00:23:53.299 four, a global tour of joint dominion. It turns 00:23:53.299 --> 00:23:56.500 out that other countries have solved this box 00:23:56.500 --> 00:24:00.059 of air problem in very different, sometimes better, 00:24:00.200 --> 00:24:02.859 and sometimes, frankly, scarier ways. It varies 00:24:02.859 --> 00:24:05.859 wildly. And the legal mechanisms that each country 00:24:05.859 --> 00:24:08.299 uses tell you so much about the culture and the 00:24:08.299 --> 00:24:10.299 legal history of those places. Let's start with 00:24:10.299 --> 00:24:12.720 England and Wales. Because the first thing the 00:24:12.720 --> 00:24:14.759 source notes points out is that the word condominium 00:24:14.759 --> 00:24:17.140 is basically non -existent there. You just don't 00:24:17.140 --> 00:24:19.670 hear it. It's very, very rare. If you go to London 00:24:19.670 --> 00:24:22.170 and buy a flat in a building, you are almost 00:24:22.170 --> 00:24:24.630 certainly buying what's called a leasehold. Which 00:24:24.630 --> 00:24:26.230 means you don't actually own it, right? You're 00:24:26.230 --> 00:24:28.349 just a very, very long -term tenant. Effectively, 00:24:28.349 --> 00:24:31.750 yes. You might buy a lease for 99 years or sometimes 00:24:31.750 --> 00:24:35.730 even 999 years. But at the end of the day, there 00:24:35.730 --> 00:24:39.210 is a landlord, a freeholder, who owns the dirt 00:24:39.210 --> 00:24:42.369 and the physical building. You just own the right 00:24:42.369 --> 00:24:45.089 to occupy your flat for a very long time. Why? 00:24:45.230 --> 00:24:47.250 Why didn't they just copy the American condo 00:24:47.250 --> 00:24:49.670 law? It seems so much cleaner. Because of a weird 00:24:49.670 --> 00:24:52.829 legal glitch from the 19th century, a very famous 00:24:52.829 --> 00:24:56.109 case in property law called Tolk v. Moxhay. Tolk 00:24:56.109 --> 00:24:58.369 v. Moxhay. That sounds like a Charles Dickens 00:24:58.369 --> 00:25:00.410 novel. It really does. It's a foundational case 00:25:00.410 --> 00:25:03.150 from 1848. And basically, the English courts 00:25:03.150 --> 00:25:05.750 decided that what are called positive covenants 00:25:05.750 --> 00:25:08.410 do not run with the land for freehold property. 00:25:08.690 --> 00:25:10.730 OK, we definitely need to unpack that. Positive 00:25:10.730 --> 00:25:13.269 covenant. Sure. So a restrictive covenant is 00:25:13.269 --> 00:25:15.730 a rule that says you cannot do something. For 00:25:15.730 --> 00:25:17.970 example, you cannot build a factory on this land. 00:25:18.160 --> 00:25:20.319 English law is totally fine with that kind of 00:25:20.319 --> 00:25:22.480 rule running with the land forever. But a positive 00:25:22.480 --> 00:25:25.180 covenant is a rule that says you must do something. 00:25:25.380 --> 00:25:27.859 Specifically, you must spend money like you must 00:25:27.859 --> 00:25:31.819 pay to fix the roof. And the English court said 00:25:31.819 --> 00:25:34.799 you can't force a future owner to pay money based 00:25:34.799 --> 00:25:37.500 on a contract they never personally signed. Exactly. 00:25:37.599 --> 00:25:40.079 They thought it was too burdensome, an unacceptable 00:25:40.079 --> 00:25:43.140 clog on the free transfer of property. But think 00:25:43.140 --> 00:25:44.900 about what that means for an apartment building. 00:25:45.529 --> 00:25:49.029 If I sell my flat to you and the law says I can't 00:25:49.029 --> 00:25:51.329 legally force you to chip in for the roof repairs, 00:25:51.589 --> 00:25:53.690 the building eventually falls down. The building 00:25:53.690 --> 00:25:56.049 falls down. The entire condominium model, as 00:25:56.049 --> 00:25:58.769 we know it, requires enforceable positive covenants. 00:25:58.869 --> 00:26:01.569 So because English law forbade them on freehold 00:26:01.569 --> 00:26:04.369 land, they couldn't create condos. They had to 00:26:04.369 --> 00:26:07.529 use leases instead. Because in a landlord tenant 00:26:07.529 --> 00:26:10.529 relationship, the landlord absolutely can force 00:26:10.529 --> 00:26:12.930 the tenant to pay service charges as part of 00:26:12.930 --> 00:26:15.089 the lease agreement. So because of one single 00:26:15.089 --> 00:26:18.150 court ruling back in 1848, millions of people 00:26:18.150 --> 00:26:20.710 in the UK today are stuck in this bizarre leasehold 00:26:20.710 --> 00:26:23.089 system where they don't truly. own their own 00:26:23.089 --> 00:26:26.490 homes. Yes. And it has caused a massive political 00:26:26.490 --> 00:26:28.970 crisis in the UK in recent years with stories 00:26:28.970 --> 00:26:31.490 of escalating ground rents and abusive service 00:26:31.490 --> 00:26:34.970 charges. They tried to fix it back in 2004 with 00:26:34.970 --> 00:26:37.589 a new law to create something called common hold, 00:26:37.769 --> 00:26:40.410 which is basically the US condo system. But it 00:26:40.410 --> 00:26:43.009 has barely taken off. Why not? The banks didn't 00:26:43.009 --> 00:26:45.430 like it. The developers didn't like it. The existing 00:26:45.430 --> 00:26:48.130 freeholders fought against it. It's a classic 00:26:48.130 --> 00:26:51.349 case of what lawyers call path dependence. The 00:26:51.349 --> 00:26:54.390 old system was just too entrenched. That is just 00:26:54.390 --> 00:26:57.170 incredibly frustrating to think about. OK, let's 00:26:57.170 --> 00:26:59.390 go north from there to Scandinavia. The outline 00:26:59.390 --> 00:27:01.869 mentions Denmark and Finland as being particularly 00:27:01.869 --> 00:27:04.289 interesting. Scandinavia is fascinating because 00:27:04.289 --> 00:27:06.769 they have multiple parallel systems. In Denmark, 00:27:06.829 --> 00:27:08.849 they distinguish between an Azure Ley Light, 00:27:09.029 --> 00:27:10.970 which is a standard condo, you own the deed, 00:27:11.109 --> 00:27:14.230 and an Andalsboleg, which is a housing cooperative. 00:27:14.450 --> 00:27:16.450 We have co -ops in some U .S. cities, too, like 00:27:16.450 --> 00:27:19.299 New York. Yes, but the Danish co -op system often 00:27:19.299 --> 00:27:22.039 has strict price controls. The official value 00:27:22.039 --> 00:27:25.259 of the share you buy in the co -op is calculated 00:27:25.259 --> 00:27:28.019 based on the building's underlying mortgage and 00:27:28.019 --> 00:27:30.799 value, not just what a buyer is willing to pay 00:27:30.799 --> 00:27:33.240 on the open market. So that keeps housing more 00:27:33.240 --> 00:27:36.099 affordable. It does, but it also creates a huge 00:27:36.099 --> 00:27:39.539 black market. If the official legal price for 00:27:39.539 --> 00:27:42.839 a share in a great apartment is, say, $200 ,000, 00:27:42.960 --> 00:27:47.299 but its real market value is $400 ,000, What 00:27:47.299 --> 00:27:49.180 happens? I have to find a way to hand you an 00:27:49.180 --> 00:27:51.819 envelope with $200 ,000 in cash under the table 00:27:51.819 --> 00:27:54.299 to get the unit. Exactly. It creates these under 00:27:54.299 --> 00:27:56.440 -the -table payments that are technically illegal 00:27:56.440 --> 00:27:59.420 but widely practiced. But Finland. Finland is 00:27:59.420 --> 00:28:00.740 one that really stood out to me as being completely 00:28:00.740 --> 00:28:02.779 different. In Finland, it is standard that when 00:28:02.779 --> 00:28:04.980 you buy an apartment, you do not own real estate. 00:28:05.099 --> 00:28:06.779 You don't own real estate. What do you own then? 00:28:06.940 --> 00:28:09.480 You own shares in a limited liability company. 00:28:09.759 --> 00:28:11.859 The apartment building itself is legally structured 00:28:11.859 --> 00:28:14.160 as a company. Okay. So far, that sounds very 00:28:14.160 --> 00:28:16.569 much like a co -op model. It is. But the key 00:28:16.569 --> 00:28:19.009 is the legal distinction between owning shares, 00:28:19.230 --> 00:28:21.809 which is considered personal property, and owning 00:28:21.809 --> 00:28:24.809 land, which is real property. That distinction 00:28:24.809 --> 00:28:27.509 changes the entire power dynamic. In the U .S., 00:28:27.509 --> 00:28:30.190 if you don't pay your HOA fees, foreclosing on 00:28:30.190 --> 00:28:33.950 you is a long, expensive, difficult legal nightmare. 00:28:34.089 --> 00:28:36.930 It can take years. Courts really hate taking 00:28:36.930 --> 00:28:39.009 someone's land away. Right. It's a very high 00:28:39.009 --> 00:28:41.609 bar. In Finland, because you just own shares 00:28:41.609 --> 00:28:44.160 in the company, The company, meaning the board 00:28:44.160 --> 00:28:47.579 of directors, has the legal power to take possession 00:28:47.579 --> 00:28:49.700 of your apartment. Take possession, you mean 00:28:49.700 --> 00:28:52.599 like kick you out? Yes. If you fail to pay your 00:28:52.599 --> 00:28:54.799 monthly assessments, or if you are consistently 00:28:54.799 --> 00:28:57.539 loud and are disturbing the peace of the company, 00:28:57.779 --> 00:29:00.460 the board can vote to take control of your unit. 00:29:00.519 --> 00:29:02.420 They can physically evict you. They can then 00:29:02.420 --> 00:29:04.759 rent your apartment out on the open market, use 00:29:04.759 --> 00:29:06.940 that rental income to pay off your debts to the 00:29:06.940 --> 00:29:09.890 company, and then... Maybe let you back in a 00:29:09.890 --> 00:29:11.349 few years later once you're paid up. That is 00:29:11.349 --> 00:29:14.309 ruthless. Absolutely ruthless. It's incredibly 00:29:14.309 --> 00:29:16.730 efficient. The Finnish system prioritizes the 00:29:16.730 --> 00:29:19.210 financial health of the collective, the company, 00:29:19.349 --> 00:29:21.730 over the rights of the individual shareholder. 00:29:22.410 --> 00:29:26.410 In the U .S., your home is your castle. In Finland, 00:29:26.609 --> 00:29:28.950 your home is a share in a business. And if you're 00:29:28.950 --> 00:29:31.029 a bad business partner, the business has the 00:29:31.029 --> 00:29:34.450 right to protect itself from you. Wow. It really 00:29:34.450 --> 00:29:37.049 highlights how deeply culture shapes law. Yeah. 00:29:37.130 --> 00:29:39.490 The U .S. is hyper individualistic, so it's very 00:29:39.490 --> 00:29:41.930 hard to evict someone. Finland's is more collectivist, 00:29:42.009 --> 00:29:44.109 so it's much easier to protect the group. Exactly. 00:29:44.349 --> 00:29:47.910 Now let's jump across the world to Asia, to Singapore. 00:29:48.130 --> 00:29:50.009 Singapore is the capital of high density living. 00:29:50.130 --> 00:29:51.950 I would just assume that basically everyone lives 00:29:51.950 --> 00:29:53.910 in a condo. Almost everyone lives in an apartment. 00:29:54.029 --> 00:29:57.269 Yes. But they do not call them all condos. In 00:29:57.269 --> 00:29:59.890 Singapore, the word condominium is a massive 00:29:59.890 --> 00:30:02.529 status symbol. It has a specific legal meaning. 00:30:02.730 --> 00:30:05.359 How so? About 80 percent of Singaporeans live 00:30:05.359 --> 00:30:07.660 in what are called HDB flats. That's the Housing 00:30:07.660 --> 00:30:10.359 and Development Board. This is government built 00:30:10.359 --> 00:30:13.339 public housing. Now, it's extremely high quality, 00:30:13.480 --> 00:30:16.799 very clean, very well run. But it is at its core 00:30:16.799 --> 00:30:19.380 government subsidized and regulated housing. 00:30:19.599 --> 00:30:21.640 OK, so that's the baseline for most people. Right. 00:30:21.700 --> 00:30:25.000 The other 20 percent or so live in what are legally 00:30:25.000 --> 00:30:28.549 defined as condominiums. In Singapore, that word 00:30:28.549 --> 00:30:30.849 is reserved for private developments that have 00:30:30.849 --> 00:30:34.109 a specific list of amenities. Security guards, 00:30:34.309 --> 00:30:37.369 a swimming pool, tennis courts, a gym, that sort 00:30:37.369 --> 00:30:40.109 of thing. Ah, so it's a legally protected brand. 00:30:40.369 --> 00:30:43.390 Exactly. If you say, I live in a condo in Singapore, 00:30:43.470 --> 00:30:46.829 you are explicitly signaling that you have escaped 00:30:46.829 --> 00:30:49.769 the public HDB system. You are signaling wealth 00:30:49.769 --> 00:30:52.640 and status. It's a huge class marker. And this 00:30:52.640 --> 00:30:54.799 idea of condo law being a tool of government 00:30:54.799 --> 00:30:56.619 policy applies elsewhere in Asia, too, right? 00:30:56.680 --> 00:30:59.240 I'm thinking of Vietnam. Yes, Vietnam is a perfect 00:30:59.240 --> 00:31:01.440 example. The condo laws there are being used 00:31:01.440 --> 00:31:03.779 as a tool for managing foreign investment. The 00:31:03.779 --> 00:31:07.200 2015 law. Right. Before 2015, it was virtually 00:31:07.200 --> 00:31:09.660 impossible for a foreigner to own property in 00:31:09.660 --> 00:31:12.240 Vietnam. They open the door, but very cautiously. 00:31:12.779 --> 00:31:15.140 Foreigners can now buy and own condominiums, 00:31:15.160 --> 00:31:17.859 but with strict limits. They can only own up 00:31:17.859 --> 00:31:21.200 to 30 % of the total units in any single building. 00:31:21.380 --> 00:31:23.140 So they can't take over a whole building. Exactly. 00:31:23.180 --> 00:31:25.539 And the ownership term is usually just for a 00:31:25.539 --> 00:31:28.420 50 -year lease, though it can be extended. It's 00:31:28.420 --> 00:31:30.299 a dial that the government can turn up or down. 00:31:30.559 --> 00:31:33.000 We want some foreign money in investment, but 00:31:33.000 --> 00:31:35.859 not too much. We want to encourage density, but 00:31:35.859 --> 00:31:37.920 we don't want to lose control of our own real 00:31:37.920 --> 00:31:40.920 estate market. It's a strategic tool. Let's do 00:31:40.920 --> 00:31:42.900 a few quick notable mentions from the outline. 00:31:43.279 --> 00:31:46.000 Australia and parts of Canada, they don't use 00:31:46.000 --> 00:31:48.799 the word condo. No. In Australia and British 00:31:48.799 --> 00:31:51.240 Columbia, for example, the term is strata title. 00:31:51.380 --> 00:31:53.400 It's the same concept, just a different name. 00:31:53.660 --> 00:31:56.819 And in Spain, it's called Comunidad de Propietarios. 00:31:56.900 --> 00:31:59.319 And it is massively popular, something like more 00:31:59.319 --> 00:32:01.640 than half the entire population of Spain lives 00:32:01.640 --> 00:32:04.119 in condos. So we've seen the legal structure, 00:32:04.299 --> 00:32:07.279 the bizarre history, the global variations. Let's 00:32:07.279 --> 00:32:08.980 bring it all down to the ground level for segment 00:32:08.980 --> 00:32:11.759 five. the economics and lifestyle trade -off. 00:32:12.640 --> 00:32:15.460 At the end of the day, why do we do this? Why 00:32:15.460 --> 00:32:17.599 do millions of us choose to live in these boxes 00:32:17.599 --> 00:32:20.940 of air surrounded by rules and potentially tyrannical 00:32:20.940 --> 00:32:23.599 neighbors? Well, the primary driver is and has 00:32:23.599 --> 00:32:26.500 always been simple economics. Density makes expensive 00:32:26.500 --> 00:32:29.559 land affordable. It's basically the only way 00:32:29.559 --> 00:32:31.799 an average person can afford to own property 00:32:31.799 --> 00:32:34.720 in downtown Miami or San Francisco or Tokyo or 00:32:34.720 --> 00:32:37.180 London unless you're a multimillionaire. Right. 00:32:37.380 --> 00:32:40.200 You are splitting the astronomical cost of that 00:32:40.200 --> 00:32:42.740 one plot of dirt among 500 people instead of 00:32:42.740 --> 00:32:45.119 just one. But there's also an economic theory 00:32:45.119 --> 00:32:48.400 that explains the appeal called club goods. Club 00:32:48.400 --> 00:32:51.019 goods, like a country club. Exactly like that. 00:32:51.099 --> 00:32:53.279 It's the idea that a group of people can pool 00:32:53.279 --> 00:32:56.019 their resources to buy and enjoy things that 00:32:56.019 --> 00:32:58.769 none of them could afford on their own. I personally 00:32:58.769 --> 00:33:00.710 can't afford to have an Olympic -sized swimming 00:33:00.710 --> 00:33:04.269 pool in my backyard or a 24 -hour doorman or 00:33:04.269 --> 00:33:06.390 a state -of -the -art gym. Me neither. But if 00:33:06.390 --> 00:33:08.869 I join a club with 200 other people, which is 00:33:08.869 --> 00:33:11.390 what a condo association is, then we can all 00:33:11.390 --> 00:33:13.650 afford it easily by splitting the costs. So the 00:33:13.650 --> 00:33:16.789 condominium is, in a way, a mechanism for democratizing 00:33:16.789 --> 00:33:19.630 luxury. It absolutely is. But the cost of entry 00:33:19.630 --> 00:33:21.829 into that club, the price of that democratized 00:33:21.829 --> 00:33:24.529 luxury, is the governance struggle. You're forcing 00:33:24.529 --> 00:33:26.809 hundreds of strangers to make major financial 00:33:26.809 --> 00:33:29.930 decisions. together. And strangers rarely agree 00:33:29.930 --> 00:33:32.470 on how to spend money. The source material really 00:33:32.470 --> 00:33:34.990 highlighted the friction between different generations 00:33:34.990 --> 00:33:38.089 in these buildings. The fixed income retirees 00:33:38.089 --> 00:33:41.009 versus the young professional investors. This 00:33:41.009 --> 00:33:43.750 is the classic textbook battle in almost every 00:33:43.750 --> 00:33:46.950 older condo building. Imagine a building with 00:33:46.950 --> 00:33:50.710 a lobby that was last updated in 1985. The young 00:33:50.710 --> 00:33:52.970 professionals who just bought in want to do a 00:33:52.970 --> 00:33:55.950 massive two million dollar renovation to make 00:33:55.950 --> 00:33:58.279 it look modern. and increase the resale value 00:33:58.279 --> 00:34:00.519 of their units. Makes sense from an investment 00:34:00.519 --> 00:34:02.680 perspective. But the retirees who have lived 00:34:02.680 --> 00:34:05.180 there for 30 years are on fixed pensions and 00:34:05.180 --> 00:34:07.839 plan to die in that unit. They don't care at 00:34:07.839 --> 00:34:10.260 all about resale value. All they care about is 00:34:10.260 --> 00:34:12.659 keeping their monthly fees as low as humanly 00:34:12.659 --> 00:34:15.619 possible. A $2 million renovation is a nightmare 00:34:15.619 --> 00:34:18.139 for them. So who wins that fight? Usually whoever 00:34:18.139 --> 00:34:20.320 screams the loudest at the annual general meeting 00:34:20.320 --> 00:34:22.960 or whoever manages to get more of their allies 00:34:22.960 --> 00:34:25.739 elected to the board. This is precisely why condo 00:34:25.739 --> 00:34:27.920 policy politics can become so incredibly toxic. 00:34:28.099 --> 00:34:30.000 You are mixing people's investment strategies 00:34:30.000 --> 00:34:32.219 with their personal home economics. It's a volatile 00:34:32.219 --> 00:34:35.119 mix. And unlike in a neighborhood of single family 00:34:35.119 --> 00:34:37.519 homes, you can't just ignore your neighbor's 00:34:37.519 --> 00:34:40.619 problems. If their unit has a leak, it can destroy 00:34:40.619 --> 00:34:42.880 your unit below. And that's the flip side of 00:34:42.880 --> 00:34:45.159 the argument. Proponents of HOAs call this blight 00:34:45.159 --> 00:34:47.579 control. They argue that the strict rules are 00:34:47.579 --> 00:34:49.579 there to protect everyone's property values. 00:34:49.940 --> 00:34:52.179 They stop your neighbor from painting their house 00:34:52.179 --> 00:34:54.820 neon green or letting trash pile up in the yard 00:34:54.820 --> 00:34:57.639 or parking a rusty car on the lawn. So you trade 00:34:57.639 --> 00:35:00.059 individual liberty for protected equity. You 00:35:00.059 --> 00:35:02.599 trade liberty for protected equity. And whether 00:35:02.599 --> 00:35:04.900 that tradeoff is worth it depends entirely on 00:35:04.900 --> 00:35:07.519 your personality and your financial goals. There's 00:35:07.519 --> 00:35:10.320 no right or wrong answer. The sources also mentioned 00:35:10.320 --> 00:35:12.619 that the condo market as a whole tends to be 00:35:12.619 --> 00:35:14.599 more volatile than the single -family housing 00:35:14.599 --> 00:35:17.329 market. Why is that? It comes down to supply 00:35:17.329 --> 00:35:20.190 elasticity. It takes a long, long time to build 00:35:20.190 --> 00:35:22.730 500 new single family homes. You need a lot of 00:35:22.730 --> 00:35:25.309 lamb, a lot of different permits. But a developer 00:35:25.309 --> 00:35:29.210 can throw up a 500 unit condo tower on one single 00:35:29.210 --> 00:35:32.199 city block relatively quickly. So they can flood 00:35:32.199 --> 00:35:34.659 the market with new supply all at once. Exactly. 00:35:34.980 --> 00:35:37.340 And that's why in cities like Miami or Austin 00:35:37.340 --> 00:35:40.400 or Chicago, you see these massive boom -bust 00:35:40.400 --> 00:35:43.280 cycles in the condo market. Developers get excited. 00:35:43.360 --> 00:35:46.300 They all build 10 new towers at once. Supply 00:35:46.300 --> 00:35:49.460 suddenly outstrips demand and prices crash. Then 00:35:49.460 --> 00:35:52.420 construction stops for five years. Demand eventually 00:35:52.420 --> 00:35:54.760 catches up and overtakes the stagnant supply 00:35:54.760 --> 00:35:57.920 and prices skyrocket again. It's much more of 00:35:57.920 --> 00:36:00.159 a roller coaster compared to the slow and steady 00:36:00.159 --> 00:36:03.860 supply. So we've unpacked the box of error. We've 00:36:03.860 --> 00:36:05.800 seen how it all goes back to a border dispute 00:36:05.800 --> 00:36:08.360 in the Oregon country. We've seen the ruthless 00:36:08.360 --> 00:36:10.960 efficiency of finish share companies and the 00:36:10.960 --> 00:36:13.139 way condos function as status symbols in Singapore. 00:36:13.380 --> 00:36:15.260 It's been a journey through the invisible legal 00:36:15.260 --> 00:36:17.659 lines that structure our cities. Let's try to 00:36:17.659 --> 00:36:19.719 summarize all this for the listener in our outro. 00:36:20.159 --> 00:36:23.469 What is the single biggest takeaway here? For 00:36:23.469 --> 00:36:25.349 me, the biggest takeaway is that a condominium 00:36:25.349 --> 00:36:28.150 is not a building. It is a social contract. It's 00:36:28.150 --> 00:36:30.329 a brilliant legal invention that allows us to 00:36:30.329 --> 00:36:32.829 slice up the sky and own it. But the price of 00:36:32.829 --> 00:36:34.809 that ownership is that we must agree to govern 00:36:34.809 --> 00:36:37.670 ourselves like a tiny, independent nation state. 00:36:37.929 --> 00:36:41.090 I love that framing. From a mechanism to avoid 00:36:41.090 --> 00:36:44.650 war in 1818 to a housing solution today, it's 00:36:44.650 --> 00:36:47.090 all about the fundamental tension of how we define 00:36:47.090 --> 00:36:50.889 mine versus ours. We are trying to impose the 00:36:50.889 --> 00:36:54.210 fierce ideal of private ownership onto a fundamentally 00:36:54.210 --> 00:36:57.130 shared space. And it works for the most part. 00:36:57.250 --> 00:37:00.809 It allows our modern, dense cities to exist. 00:37:01.130 --> 00:37:04.170 But it requires a level of day -to -day cooperation 00:37:04.170 --> 00:37:07.570 and compromise that is, frankly, unnatural for 00:37:07.570 --> 00:37:09.860 many people. And here's the final provocative 00:37:09.860 --> 00:37:12.260 thought we want to leave you with. We often talk 00:37:12.260 --> 00:37:14.260 about the three levels of government, federal, 00:37:14.440 --> 00:37:17.079 state, and local. We vote. We complain about 00:37:17.079 --> 00:37:18.820 them. We watch them on the news. The ones we 00:37:18.820 --> 00:37:20.780 all know. But you pose a question in the notes 00:37:20.780 --> 00:37:22.739 that I really can't stop thinking about. If a 00:37:22.739 --> 00:37:25.300 condominium association is essentially a fourth 00:37:25.300 --> 00:37:27.800 level of government, a private corporate government 00:37:27.800 --> 00:37:30.039 that millions and millions of us now live under, 00:37:30.199 --> 00:37:33.099 are we actually any good at it? It's a serious 00:37:33.099 --> 00:37:36.380 question. We complain constantly about gridlock 00:37:36.380 --> 00:37:39.059 in Congress. But have you ever been to a condo 00:37:39.059 --> 00:37:40.599 board meeting where they're trying to decide 00:37:40.599 --> 00:37:42.840 on the new color for the hallway carpet? It is 00:37:42.840 --> 00:37:46.119 absolute total war. It is. Self -governance, 00:37:46.139 --> 00:37:48.179 even on that tiny scale, requires compromise, 00:37:48.480 --> 00:37:52.239 financial literacy, patience and empathy. And 00:37:52.239 --> 00:37:54.420 if you look at the history of HOAs and the number 00:37:54.420 --> 00:37:57.699 of lawsuits and the bitter fights. The jury is 00:37:57.699 --> 00:38:00.559 very much still out on whether we are actually 00:38:00.559 --> 00:38:03.699 capable of that level of sustained micropolitical 00:38:03.699 --> 00:38:06.800 cooperation. We are building thousands upon thousands 00:38:06.800 --> 00:38:09.139 of these little democracies, and most of us are 00:38:09.139 --> 00:38:11.199 too busy or too tired to participate in them. 00:38:11.559 --> 00:38:13.739 Which means we often leave the immense power 00:38:13.739 --> 00:38:16.199 to the handful of people with the most free time 00:38:16.199 --> 00:38:18.519 and the strongest opinions. Which is rarely a 00:38:18.519 --> 00:38:20.960 recipe for good governance, is it? That is a 00:38:20.960 --> 00:38:23.440 terrifying and an excellent point to end on. 00:38:23.639 --> 00:38:25.539 So the next time you drive past a high -rise 00:38:25.539 --> 00:38:27.570 building, don't just see the windows and the 00:38:27.570 --> 00:38:30.250 bricks. Ask yourself, is that a rental building? 00:38:30.710 --> 00:38:33.730 Or is it a complex, invisible web of shared air 00:38:33.730 --> 00:38:37.190 rights, intense legal battles, and a tiny, fragile 00:38:37.190 --> 00:38:39.909 democracy struggling to sustain itself 50 stories 00:38:39.909 --> 00:38:42.409 in the sky? It's a fascinating way to look at 00:38:42.409 --> 00:38:44.570 the skyline. It changes everything. Thanks for 00:38:44.570 --> 00:38:46.070 listening to The Deep Dive. We'll see you next 00:38:46.070 --> 00:38:46.289 time.