You know, I was looking at a real estate listing
the other day for a unit in a high -rise downtown.
Right. And it was all pretty standard stuff,
you know, granite countertops, gym access, the
usual marketing gloss. But then, for the sake
of this deep dive, I actually pulled the legal
description of the property, the deed itself.
Ah, the fun part. The really fun part. And I
realized something, well, something strange.
It didn't describe a building. At all. Yeah.
It didn't even describe a plot of land in the
traditional sense. It described a set of coordinates
in space. Right. It describes a volumetric space,
a specific cube of air suspended somewhere above
the earth. A cube of air. Exactly. And it just
it hit me that when we use the word condominium,
we all picture a specific type of architecture.
You know, a glass tower, maybe with a balcony.
Sure. A high rise. But we aren't describing architecture
at all. We're describing a legal fiction. A legal
trick. We're describing a way to sell something
that for, I mean, for the vast majority of human
history was legally impossible to sell. It is
arguably one of the most clever and complicated
legal hacks of the 20th century. Because if you
really look at the history of property law, I
mean, going back to the Romans or even English
common law, the idea of slicing property horizontally
is. It's a nightmare. A total nightmare. It breaks
almost every default rule we have about what
ownership even means. Because land is supposed
to be infinite, right? Yeah. Vertically speaking.
Precisely. This is the ad coelum doctrine. The
full Latin maxim is, and I love this, Okay, you've
got to translate that one for us. It translates
to, Which is just a fantastic mental image. So
if I own a little plot of dirt, I also own the
satellites passing overhead and I guess the magma
in the core of the earth below me. Theoretically,
yes. That is the default setting of Western property
law. Ownership is a vertical shaft. So under
that ancient system, a high rise apartment building
where different people own individual floors
is just it's a legal impossibility. Well, if
I sell you the second floor, I'm technically
violating the rights of the guy on the first
floor who, by definition, owns the sky above
his head. He owns your space. I see. So to create
what we now call a condominium, society essentially
had to invent a whole new legal regime that just
suspends that ancient law. You have to override
it. We had to create a system where you can own
a fee simple title, which is the strongest form
of ownership there is, to a box of air that's
just hovering 50 feet off the ground. And to
make that work, you don't just need a builder
and some concrete. You need a master deed. You
need a legal document that in effect rewrites
the laws of physics for that one specific plot
of land. And that is the mission for this deep
dive. We're going to unpack this invisible structure.
We're going to look at what you actually own
when you buy a condo. And spoiler alert, it is
significantly weirder than most buyers realize.
Oh, much weirder. We're going to look at the
surprising history. which, believe it or not,
involves 19th century geopolitical border disputes,
not just housing. And then we're going to take
a global tour to see how this concept of joint
dominion shapes lives from Scandinavia to Singapore.
And it really is global. It shapes how millions
and millions of people live, how they interact
with their neighbors, and effectively how they
govern themselves in these tiny little micro
societies. So let's start with the basics. Segment
one. What do you actually own? Because I think
the average person, myself included before this,
equates buying a condo with buying a house, just,
you know, smaller. But legally, they're not even
the same species. They are completely different
animals entirely. When you buy a single family
home, you get the whole package. You get the
land, the house, the dirt, the sky, simple. The
whole vertical shaft. The whole vertical shaft
from heaven to hell. But when you buy a condo,
you're purchasing two very specific, very different
things at the same time. First, you are buying
the unit. Box of air. The box of air. But we
need to be really precise here because this is
where all the confusion starts. In a typical
residential condo declaration, your ownership
is often defined as the airspace within the boundaries
of the home. So if you're standing in your living
room and you reach out and touch the wall. I
own the wall. Right. That's my wall. Usually,
no. You own the paint. And you own everything
inward from the paint. Just the paint? The paint,
maybe the top layer of skim -coated plaster.
You own the air, the internal partition walls
that aren't holding up the building, the cabinets,
the flooring. But the wall itself, the drywall,
the studs, the insulation, the exterior brick,
you do not own that individually. Wait, let's
just pause on that for a second because that
has huge implications. If I decide I want to
drill a hole in the wall to hang a heavy mirror
and I hit a stud. I am technically drilling into
property I don't exclusively own. Technically,
yes. You are altering what are called the common
elements or common areas. Now, in practice, of
course, the governing documents will usually
allow for reasonable use, like hanging pictures.
No one's going to sue you for that. But what
if you wanted to knock that wall down to create
a big open plan kitchen? Right, a common renovation.
You can't just do it. Even if an engineer tells
you it's not load -bearing. That wall might be
the legal boundary of your property as defined
in the deed. You might be destroying property
that belongs to the association, to everyone.
That's incredible. So this brings us to the second
thing you buy. You get the box of air and you
buy a share of... Everything else. The common
areas. Correct. The lobby, the elevators, the
roof, the land, the building sits on, the gym,
the pool, the pipes running inside the walls,
the wiring, all of it. These are owned by everyone
together. But how does that ownership actually
work in practice? I mean, do I own, say, three
specific square feet of the roof? Can I go up
there with a lawn chair and a cooler and say,
this patch of shingles right here is mine. Everyone
else get off. No. And that's the crucial legal
distinction. It's called an undivided ownership
interest. Think of it this way. If you and I
own a racehorse together, you don't own the front
legs and I own the back legs. That would be a
very slow horse. It would be a very difficult
horse to manage. We both own a percentage, say,
50 % of the entire horse. You can't just decide
to cut off a leg and sell it, because I own 50
% of that leg too. I've heard the pie analogy
used here. Does that work? The pie analogy is
useful, but we have to tweak it a bit. In a condo,
you own one specific slice of the pie exclusively.
That's your unit. It's yours. You can eat it.
You can decorate it. You can, I guess, burn it
if you want. It feels a little extreme. A little
extreme, but legally, it's your slice. But the
crust, the pan, and the oven that baked the pie,
those are owned by everyone who has a slice.
You all own the crust and the pan together as
what's legally called tenants in common. And
because we all own the crust together, If the
crust cracks, we all have to pay to fix it. Precisely.
And this is where the legal reality hits the
wallet. This is the entire reason that condo
fees or assessments or levies exist. You are
collectively maintaining the common elements.
So if the roof leaks over the penthouse unit
on the top floor. The guy on the ground floor
still has to pay. The guy on the ground floor
has to pay his share to fix it, even though the
water isn't dripping anywhere near his head,
because he owns, let's say, 0 .5 % of that roof.
That seems fair, I guess, but it also seems like
a recipe for constant conflict. Who defines where
my unit, my slice of pie ends and the common
area? The crust begins. Is it the paint? The
drywall? the center of the wall stud it is all
defined in the declaration it can also be called
the master deed or the enabling declaration depending
on the state this document is the absolute dna
of the building it's a massive dense legal document
that gets filed with the local government before
the first unit is ever sold and it literally
draws those lines it draws those invisible lines
in three -dimensional space It will say something
like, Unit 101 consists of the space between
elevation X and elevation Y bounded by the interior
undecorated surfaces of the perimeter walls.
It's incredibly specific. It sounds like a constitution
for a tiny micronation. It effectively is. And
just like a constitution, it is incredibly hard
to change. To amend a master deed, you often
need a super majority vote of all the owners,
sometimes 67 percent, sometimes as high as 100
percent. 100 percent. You'll never get that.
You'll almost never get it. And on top of that,
you often need the approval of all the mortgage
lenders who have loans in the building. It is,
for all intents and purposes, set in stone. OK,
but then you have all the other documents. People
talk about the bylaws, the rules and regs. I
feel like most people, myself included, just
lump these all together as the HOA rules. But
there's a hierarchy here, isn't there? A huge
hierarchy. It's a pyramid of authority. At the
very top, you have state law, the Condominium
Act for your state. Nothing can violate that.
Below that, you have the master deed we just
talked about. That's the Constitution. It defines
the property rights. Then below that, you have
the bylaws. The bylaws primarily describe how
the government The HOA is supposed to run itself.
How many board members are there? How often they
meet? How elections are held? So it's the machinery
of government. Exactly. And then at the bottom
of the pyramid, you have the rules and regulations.
The no pink curtains rules. That's where you
find the no pink curtains rules. These are often
captured in a document called the CCNR's Covenants,
Conditions, and Restrictions. These are really
the personality of the complex. While the master
deed defines the physical body of the building,
the CCNR's define its behavior. So things like
pets. Can you have a dog? What size? Can you
rent your unit out on Airbnb? Can you park a
commercial truck in the driveway? What color
can you paint your front door? All of that is
in the CC &Rs. And the key phrase I kept seeing
in the research for this was covenants running
with the land, which I have to say sounds like
something out of a fantasy novel. It does sound
very dramatic. But it's actually a kind of terrifying
legal concept. It means the rules are attached
to the property itself, not to the person who
owns it. So when you buy the unit, you are automatically
and legally stepping into that set of rules.
You can't say, well, I didn't personally sign
that rule about dog sizes. It doesn't matter.
The unit itself is bound by them. You are, in
essence, buying a box of air that comes with
a book of laws permanently glued to it. So to
recap, you're buying a box of air, a tiny percentage
of a shared racehorse, and a binding contract
to behave a certain way for as long as you own
it. It's a very complex bundle of rights. It
is. And what's so fascinating is that while this
all feels like a very modern solution to urban
density, the concept and even the word itself
has a history that has absolutely nothing to
do with housing. This was my favorite part of
the prep. Segment two, the surprising origin
story. Because condominium, it sounds Latin.
So I just assumed the Romans must have invented
it. It is Latin. You're right about that. But
remember what I said earlier. The Romans hated
the idea of horizontal property division. They
were strict. Add Cullinan people up to the heavens,
down to hell. So for them, the word condominium
did not and could not describe a building. So
what on earth did it mean? Just break the word
down. Condi meaning together or jointly. And
dominium meaning dominion or sovereignty or absolute
ownership. Joint dominion. Joint dominion. That
sounds political. It was entirely political.
For centuries, the term condominium referred
to a territory over which two or more sovereign
powers shared equal rule. So a country. A shared
country. The sources highlighted a specific example
that most Americans probably learned about in
history class, even if they don't know the specific
legal term for it. The Oregon country. Right,
from the Oregon Trail in the 1800s. Exactly.
From 1818 until 1846, that vast territory that
is now Oregon, Washington, Idaho, and parts of
British Columbia wasn't strictly U .S. soil and
it wasn't strictly British soil. It was, legally
speaking, a condominium. I always just thought
they hadn't decided whose it was yet. Like, it
was just... disputed land no it's more formal
than that they had a treaty the treaty of 1818
it explicitly established joint usage and joint
occupancy citizens of the united states and subjects
of great britain could both settle there trade
there and travel there freely there was no border
they were sharing sovereignty because they couldn't
agree on how to split it up without going to
war again that is just Wild. Yeah. So the word
we use for our apartment complex comes directly
from a diplomatic mechanism to prevent a war
between the United States and the British Empire.
It's the exact same legal mechanism. Two or more
entities or in a building, hundreds of entities
sharing dominion over a single plot of land.
And honestly, the failure of the Oregon condominium
tells you a lot about why HOA board meetings
can get so nasty. How so? What happened? Well,
it worked great on paper. But in reality, you
had two groups with completely different goals.
You had the Hudson's Bay Company, which was British,
and their entire goal was to monopolize the fur
trade. They wanted to keep the area wild. And
then you had the American settlers pouring in
over the Oregon Trail. Their goal was to farm.
They wanted to clear the land, build towns, and
establish a different kind of economy. They had
different legal traditions, different cultures,
different economic goals. The friction just became
unbearable. It's the classic tragedy of the commons.
Exactly. Joint dominion only works if everyone
can agree on how to use the dominion. By the
early 1840s, the friction was too high, the goals
were too different, so they gave up on the condominium
model, and they finally drew a line, the 49th
parallel, which is now the border. border with
Canada, they split the asset. Which is the one
thing you can't do in a high rise building. You
can't just draw a line down the middle of the
elevator shaft and say, OK, the British on the
left side and the Americans on the right. Right.
You are permanently forced to remain in the condominium.
That is why the governance structure is so critical
and so often stressed to its breaking point.
OK, so this debunks the Roman myth. It was widely
reported in the 1960s, wasn't it, that this was
a Roman idea? It was. A lot of the early marketing
materials for condos in the U .S. tried to give
it this ancient classical pedigree. They'd say
this is based on a Roman model, but it's just
not true. The concept of an estate in the air
was completely antithetical to Roman law. So
if the Romans didn't do it. and the Oregon country
was a political thing, when did condominium actually
become a housing term? How did it get to the
U .S.? It's surprisingly recent. The concept
of owning floors separately existed in pockets
of medieval Europe, usually in dense, walled
cities where space was at an absolute premium.
But it never really had a formal, modern, legal
framework. The modern condominium law actually
entered the United States via the Caribbean.
The Caribbean, not Europe. Nope. Puerto Rico
passed what it called a Horizontal Property Act
in 1958. They were facing a housing shortage.
They needed density. And their legal system has
roots in Spanish civil law, which was more flexible
on this issue than English common law was. So
they were the pioneers in the U .S. context.
1958, that is. That's yesterday in legal terms.
It's brand new. And from Puerto Rico, it jumped
to the mainland. And here is a great trivia question
for you. Where was the very first condominium
built in the continental United States? You'd
probably guess New York, Chicago, maybe Miami.
I would absolutely guess New York City. High
density, ridiculously expensive land. Seems like
the obvious place. It's the logical guess. But
you would be wrong. It was Salt Lake City, Utah
in 1960. Utah? No way. Why on earth Utah? It's
a bit of a historical anomaly. Utah passed a
version of the condo law very, very early on.
Some historians speculate it might have been
influenced by the Mormon history of cooperative
living and community planning, though that's
not proven. But for whatever reason, they had
the legal framework on the books and a developer
was ready to go. But just because it's legal
doesn't mean people will buy it. And more importantly,
it doesn't mean banks will lend money for it.
They must have been terrified. You want a mortgage
for a box of air. That was a huge bottleneck.
Banks understand land. If you default on a house
loan, they can foreclose and take the land. Land
has value. But how do you repossess a slice of
sky 50 feet up? It was considered incredibly
high risk. The catalyst that changed everything
that blew the doors open was the federal government.
Of course. Always follow the money. Specifically,
it was the Housing Act of 1961, Section 234.
This new provision allowed the Federal Housing
Administration, the FHA, to insure mortgages
on condominiums. Ah, okay. So the government
basically said to the banks, don't worry, if
this borrower defaults on their loan for this
weird box of air, we will cover your loss. Exactly.
It completely de -risked the asset class overnight.
Suddenly, capital flooded into the market. Developers
could get loans. Buyers could get mortgages.
And by 1969, just eight years later, every single
state in the U .S. had passed its own condo laws.
We went from basically zero to ubiquitous in
less than a single decade. That explains so much.
It explains why so many of those, you know, brutalist
concrete condo buildings seem to date from the
late 60s and early 70s. It was a gold rush. It
absolutely was. It allowed developers to stack
homes vertically, multiplying the potential value
of a single plot of land by 50 or 100 times.
But in doing so, it also created this entirely
new social organism. Because once you stack all
those people on top of each other, you need a
government to run the stack. Which brings us
perfectly to segment three, the governance machine,
the dreaded or beloved HOA. The Homeowners Association.
If the condominium is the joint dominion. The
HOA is the government of that dominion. And we
are just using government as a metaphor here,
are we? I mean, they have powers that really
do rival actual municipalities. They absolutely
do. Think about what a basic city government
does. It taxes you property taxes to pay for
roads, police, and sanitation. It passes laws,
ordinances to regulate behavior. And it enforces
those laws with fines or other penalties. And
HOA does the exact same things, just on a smaller
scale. Okay, so they tax you through the assessments
or HOA fees. Right. And they have the legal power
to collect those taxes. If you don't pay your
property tax, the city can eventually take your
house. In many, many states, if you don't pay
your HOA fees, the HOA can place a lien on your
unit and foreclose on it. They can take your
home. They can literally take your home to pay
for your share of the unpaid pool maintenance
or landscaping costs. That is the part that I
think really scares people. You can be completely
up to date on your mortgage. You can own your
unit free and clear. But you can still lose your
house because you fell behind on paying for the
shared expenses. It happens because going back
to that undivided interest concept, if you don't
pay your share, your neighbors have to pay it
for you. The building solvency, its ability to
pay its insurance and its water bill depends
on that collective contribution. So the law gives
them very strong enforcement powers. But the
real friction, the stories you always hear, usually
isn't about the money for the roof. It's about
the control. It's about those bylaws and rules
we mentioned earlier. This is the mini -municipality
aspect in its purest form. The board of directors,
which is the executive branch of this little
government, is elected by the owners. They're
your neighbors. They're Bob from 3B and Susan
from the penthouse. Right. But once they are
elected, they have the power to enforce the rules
and, in some cases, create new ones that regulate
the aesthetics and behavior of the entire community.
And this is where we get the horror stories,
the stories of petty tyranny. The board member
who goes around with a ruler measuring the height
of everyone's lawn. It's a structural problem.
In a real city government, you have checks and
balances. You have a professional civil service,
a press corps watching what they do, an opposition
party. In a condo, the board is just a handful
of volunteers. They might have zero experience
in management, law, or finance, but they suddenly
have immense power over your daily life and the
value of your largest asset. Now, we've been
talking almost exclusively about residential
condos, but the outline points out something
crucial. Condominium is just a legal wrapper.
You can wrap basically anything in it. Anything.
You can condo a parking lot where each person
owns their specific parking space. You can condo
boat slip at a marina. You can condo office space.
A shopping mall was the one that blew my mind.
Shopping malls are a great example of commercial
condos. Imagine you're a big retailer like The
Gap or Starbucks. You don't necessarily want
to rent from a landlord forever. You want to
own your real estate to control your costs and
build equity. But you can't buy just the store
because it's physically attached to a massive,
complex building. So the mall gets turned into
a condo. The individual stores are the units
and the walkways, the food court, the parking
lot. Those are the common elements. Exactly.
And all the businesses pay fees to maintain the
atrium and pay the security guards, just like
residents in a building pay for a lobby and a
doorman. But there's a specific and very serious
risk with commercial condos that the research
highlights. It's called the holdout problem.
The holdout problem. What's that? Well, commercial
needs change fast. A shopping mall that was built
in 1980 might be obsolete today. The community
might desperately need it to be torn down and
turned into an Amazon distribution center or
a block of apartments. If one single landlord
owned that whole mall, they could just make the
business decision to knock it down and redevelop
it. But if the mall is a condominium with 50
different store owners. You need to get all 50
of them to agree to sell. Right. And what if
one of them, let's say it's the guy who owns
the little pretzel shop, refuses to sell? Or
what if he demands 10 times the market value
for his unit? The whole multi -billion dollar
redevelopment is blocked. It's blocked. The rigid
legal structure of the condominium, which was
designed for stability, can freeze a property
in time, making it incredibly hard to adapt to
changing economic realities. That is fascinating.
The legal structure that enables the initial
development can actually paralyze it 50 years
later. It's a huge, huge problem, especially
with aging commercial and even residential condo
buildings. And we see another strange variation
of this with something called detached condos.
Oh, I've seen these. They look exactly like regular
suburban houses. Picket fence, a little yard,
no shared walls. But the listing says it's a
condo. I've never understood why. It's usually
a developer loophole related to zoning. The local
zoning laws might say, on this 10 -acre plot,
you can only build 20 single -family houses.
But the state condo laws, which are separate,
might allow for higher density. So the developer
builds 40 houses, calls them site condos, and
legally designates all the yards and roads as
common elements. So I buy the house. It looks
like my own house. but i don't actually own the
grass in my own backyard legally no you own the
house itself the unit and the hoa which is all
the homeowners together owns the grass this is
why you often see those communities where the
landscaping is absolutely identical from house
to house because the owner can't mow their own
lawn or plant their own flowers exactly the hoa
does it all to maintain a uniform look It's a
way to sell the single family home dream with
the maintenance free lifestyle promise. But what
you're really sacrificing is autonomy over your
own property. It just really reinforces the main
point over and over again. Condominium is a legal
status. It is not a building type. It is 100
percent illegal status. OK, let's zoom out. We've
been very, very U .S. centric so far. But this
is a global phenomenon. And as we move into segment
four, a global tour of joint dominion. It turns
out that other countries have solved this box
of air problem in very different, sometimes better,
and sometimes, frankly, scarier ways. It varies
wildly. And the legal mechanisms that each country
uses tell you so much about the culture and the
legal history of those places. Let's start with
England and Wales. Because the first thing the
source notes points out is that the word condominium
is basically non -existent there. You just don't
hear it. It's very, very rare. If you go to London
and buy a flat in a building, you are almost
certainly buying what's called a leasehold. Which
means you don't actually own it, right? You're
just a very, very long -term tenant. Effectively,
yes. You might buy a lease for 99 years or sometimes
even 999 years. But at the end of the day, there
is a landlord, a freeholder, who owns the dirt
and the physical building. You just own the right
to occupy your flat for a very long time. Why?
Why didn't they just copy the American condo
law? It seems so much cleaner. Because of a weird
legal glitch from the 19th century, a very famous
case in property law called Tolk v. Moxhay. Tolk
v. Moxhay. That sounds like a Charles Dickens
novel. It really does. It's a foundational case
from 1848. And basically, the English courts
decided that what are called positive covenants
do not run with the land for freehold property.
OK, we definitely need to unpack that. Positive
covenant. Sure. So a restrictive covenant is
a rule that says you cannot do something. For
example, you cannot build a factory on this land.
English law is totally fine with that kind of
rule running with the land forever. But a positive
covenant is a rule that says you must do something.
Specifically, you must spend money like you must
pay to fix the roof. And the English court said
you can't force a future owner to pay money based
on a contract they never personally signed. Exactly.
They thought it was too burdensome, an unacceptable
clog on the free transfer of property. But think
about what that means for an apartment building.
If I sell my flat to you and the law says I can't
legally force you to chip in for the roof repairs,
the building eventually falls down. The building
falls down. The entire condominium model, as
we know it, requires enforceable positive covenants.
So because English law forbade them on freehold
land, they couldn't create condos. They had to
use leases instead. Because in a landlord tenant
relationship, the landlord absolutely can force
the tenant to pay service charges as part of
the lease agreement. So because of one single
court ruling back in 1848, millions of people
in the UK today are stuck in this bizarre leasehold
system where they don't truly. own their own
homes. Yes. And it has caused a massive political
crisis in the UK in recent years with stories
of escalating ground rents and abusive service
charges. They tried to fix it back in 2004 with
a new law to create something called common hold,
which is basically the US condo system. But it
has barely taken off. Why not? The banks didn't
like it. The developers didn't like it. The existing
freeholders fought against it. It's a classic
case of what lawyers call path dependence. The
old system was just too entrenched. That is just
incredibly frustrating to think about. OK, let's
go north from there to Scandinavia. The outline
mentions Denmark and Finland as being particularly
interesting. Scandinavia is fascinating because
they have multiple parallel systems. In Denmark,
they distinguish between an Azure Ley Light,
which is a standard condo, you own the deed,
and an Andalsboleg, which is a housing cooperative.
We have co -ops in some U .S. cities, too, like
New York. Yes, but the Danish co -op system often
has strict price controls. The official value
of the share you buy in the co -op is calculated
based on the building's underlying mortgage and
value, not just what a buyer is willing to pay
on the open market. So that keeps housing more
affordable. It does, but it also creates a huge
black market. If the official legal price for
a share in a great apartment is, say, $200 ,000,
but its real market value is $400 ,000, What
happens? I have to find a way to hand you an
envelope with $200 ,000 in cash under the table
to get the unit. Exactly. It creates these under
-the -table payments that are technically illegal
but widely practiced. But Finland. Finland is
one that really stood out to me as being completely
different. In Finland, it is standard that when
you buy an apartment, you do not own real estate.
You don't own real estate. What do you own then?
You own shares in a limited liability company.
The apartment building itself is legally structured
as a company. Okay. So far, that sounds very
much like a co -op model. It is. But the key
is the legal distinction between owning shares,
which is considered personal property, and owning
land, which is real property. That distinction
changes the entire power dynamic. In the U .S.,
if you don't pay your HOA fees, foreclosing on
you is a long, expensive, difficult legal nightmare.
It can take years. Courts really hate taking
someone's land away. Right. It's a very high
bar. In Finland, because you just own shares
in the company, The company, meaning the board
of directors, has the legal power to take possession
of your apartment. Take possession, you mean
like kick you out? Yes. If you fail to pay your
monthly assessments, or if you are consistently
loud and are disturbing the peace of the company,
the board can vote to take control of your unit.
They can physically evict you. They can then
rent your apartment out on the open market, use
that rental income to pay off your debts to the
company, and then... Maybe let you back in a
few years later once you're paid up. That is
ruthless. Absolutely ruthless. It's incredibly
efficient. The Finnish system prioritizes the
financial health of the collective, the company,
over the rights of the individual shareholder.
In the U .S., your home is your castle. In Finland,
your home is a share in a business. And if you're
a bad business partner, the business has the
right to protect itself from you. Wow. It really
highlights how deeply culture shapes law. Yeah.
The U .S. is hyper individualistic, so it's very
hard to evict someone. Finland's is more collectivist,
so it's much easier to protect the group. Exactly.
Now let's jump across the world to Asia, to Singapore.
Singapore is the capital of high density living.
I would just assume that basically everyone lives
in a condo. Almost everyone lives in an apartment.
Yes. But they do not call them all condos. In
Singapore, the word condominium is a massive
status symbol. It has a specific legal meaning.
How so? About 80 percent of Singaporeans live
in what are called HDB flats. That's the Housing
and Development Board. This is government built
public housing. Now, it's extremely high quality,
very clean, very well run. But it is at its core
government subsidized and regulated housing.
OK, so that's the baseline for most people. Right.
The other 20 percent or so live in what are legally
defined as condominiums. In Singapore, that word
is reserved for private developments that have
a specific list of amenities. Security guards,
a swimming pool, tennis courts, a gym, that sort
of thing. Ah, so it's a legally protected brand.
Exactly. If you say, I live in a condo in Singapore,
you are explicitly signaling that you have escaped
the public HDB system. You are signaling wealth
and status. It's a huge class marker. And this
idea of condo law being a tool of government
policy applies elsewhere in Asia, too, right?
I'm thinking of Vietnam. Yes, Vietnam is a perfect
example. The condo laws there are being used
as a tool for managing foreign investment. The
2015 law. Right. Before 2015, it was virtually
impossible for a foreigner to own property in
Vietnam. They open the door, but very cautiously.
Foreigners can now buy and own condominiums,
but with strict limits. They can only own up
to 30 % of the total units in any single building.
So they can't take over a whole building. Exactly.
And the ownership term is usually just for a
50 -year lease, though it can be extended. It's
a dial that the government can turn up or down.
We want some foreign money in investment, but
not too much. We want to encourage density, but
we don't want to lose control of our own real
estate market. It's a strategic tool. Let's do
a few quick notable mentions from the outline.
Australia and parts of Canada, they don't use
the word condo. No. In Australia and British
Columbia, for example, the term is strata title.
It's the same concept, just a different name.
And in Spain, it's called Comunidad de Propietarios.
And it is massively popular, something like more
than half the entire population of Spain lives
in condos. So we've seen the legal structure,
the bizarre history, the global variations. Let's
bring it all down to the ground level for segment
five. the economics and lifestyle trade -off.
At the end of the day, why do we do this? Why
do millions of us choose to live in these boxes
of air surrounded by rules and potentially tyrannical
neighbors? Well, the primary driver is and has
always been simple economics. Density makes expensive
land affordable. It's basically the only way
an average person can afford to own property
in downtown Miami or San Francisco or Tokyo or
London unless you're a multimillionaire. Right.
You are splitting the astronomical cost of that
one plot of dirt among 500 people instead of
just one. But there's also an economic theory
that explains the appeal called club goods. Club
goods, like a country club. Exactly like that.
It's the idea that a group of people can pool
their resources to buy and enjoy things that
none of them could afford on their own. I personally
can't afford to have an Olympic -sized swimming
pool in my backyard or a 24 -hour doorman or
a state -of -the -art gym. Me neither. But if
I join a club with 200 other people, which is
what a condo association is, then we can all
afford it easily by splitting the costs. So the
condominium is, in a way, a mechanism for democratizing
luxury. It absolutely is. But the cost of entry
into that club, the price of that democratized
luxury, is the governance struggle. You're forcing
hundreds of strangers to make major financial
decisions. together. And strangers rarely agree
on how to spend money. The source material really
highlighted the friction between different generations
in these buildings. The fixed income retirees
versus the young professional investors. This
is the classic textbook battle in almost every
older condo building. Imagine a building with
a lobby that was last updated in 1985. The young
professionals who just bought in want to do a
massive two million dollar renovation to make
it look modern. and increase the resale value
of their units. Makes sense from an investment
perspective. But the retirees who have lived
there for 30 years are on fixed pensions and
plan to die in that unit. They don't care at
all about resale value. All they care about is
keeping their monthly fees as low as humanly
possible. A $2 million renovation is a nightmare
for them. So who wins that fight? Usually whoever
screams the loudest at the annual general meeting
or whoever manages to get more of their allies
elected to the board. This is precisely why condo
policy politics can become so incredibly toxic.
You are mixing people's investment strategies
with their personal home economics. It's a volatile
mix. And unlike in a neighborhood of single family
homes, you can't just ignore your neighbor's
problems. If their unit has a leak, it can destroy
your unit below. And that's the flip side of
the argument. Proponents of HOAs call this blight
control. They argue that the strict rules are
there to protect everyone's property values.
They stop your neighbor from painting their house
neon green or letting trash pile up in the yard
or parking a rusty car on the lawn. So you trade
individual liberty for protected equity. You
trade liberty for protected equity. And whether
that tradeoff is worth it depends entirely on
your personality and your financial goals. There's
no right or wrong answer. The sources also mentioned
that the condo market as a whole tends to be
more volatile than the single -family housing
market. Why is that? It comes down to supply
elasticity. It takes a long, long time to build
500 new single family homes. You need a lot of
lamb, a lot of different permits. But a developer
can throw up a 500 unit condo tower on one single
city block relatively quickly. So they can flood
the market with new supply all at once. Exactly.
And that's why in cities like Miami or Austin
or Chicago, you see these massive boom -bust
cycles in the condo market. Developers get excited.
They all build 10 new towers at once. Supply
suddenly outstrips demand and prices crash. Then
construction stops for five years. Demand eventually
catches up and overtakes the stagnant supply
and prices skyrocket again. It's much more of
a roller coaster compared to the slow and steady
supply. So we've unpacked the box of error. We've
seen how it all goes back to a border dispute
in the Oregon country. We've seen the ruthless
efficiency of finish share companies and the
way condos function as status symbols in Singapore.
It's been a journey through the invisible legal
lines that structure our cities. Let's try to
summarize all this for the listener in our outro.
What is the single biggest takeaway here? For
me, the biggest takeaway is that a condominium
is not a building. It is a social contract. It's
a brilliant legal invention that allows us to
slice up the sky and own it. But the price of
that ownership is that we must agree to govern
ourselves like a tiny, independent nation state.
I love that framing. From a mechanism to avoid
war in 1818 to a housing solution today, it's
all about the fundamental tension of how we define
mine versus ours. We are trying to impose the
fierce ideal of private ownership onto a fundamentally
shared space. And it works for the most part.
It allows our modern, dense cities to exist.
But it requires a level of day -to -day cooperation
and compromise that is, frankly, unnatural for
many people. And here's the final provocative
thought we want to leave you with. We often talk
about the three levels of government, federal,
state, and local. We vote. We complain about
them. We watch them on the news. The ones we
all know. But you pose a question in the notes
that I really can't stop thinking about. If a
condominium association is essentially a fourth
level of government, a private corporate government
that millions and millions of us now live under,
are we actually any good at it? It's a serious
question. We complain constantly about gridlock
in Congress. But have you ever been to a condo
board meeting where they're trying to decide
on the new color for the hallway carpet? It is
absolute total war. It is. Self -governance,
even on that tiny scale, requires compromise,
financial literacy, patience and empathy. And
if you look at the history of HOAs and the number
of lawsuits and the bitter fights. The jury is
very much still out on whether we are actually
capable of that level of sustained micropolitical
cooperation. We are building thousands upon thousands
of these little democracies, and most of us are
too busy or too tired to participate in them.
Which means we often leave the immense power
to the handful of people with the most free time
and the strongest opinions. Which is rarely a
recipe for good governance, is it? That is a
terrifying and an excellent point to end on.
So the next time you drive past a high -rise
building, don't just see the windows and the
bricks. Ask yourself, is that a rental building?
Or is it a complex, invisible web of shared air
rights, intense legal battles, and a tiny, fragile
democracy struggling to sustain itself 50 stories
in the sky? It's a fascinating way to look at
the skyline. It changes everything. Thanks for
listening to The Deep Dive. We'll see you next
time.