Understanding the Difference: Limited Common Elements and Deeded Usage for Real Property

When purchasing real property in a community setting, it's crucial to understand the various types of ownership and usage rights associated with different spaces.

Two common categories that often arise are limited common elements and deeded usage. In this video, I explore the differences between these two using a parking space as an example. Click here to view the video, or click on the thumbnail above. 

Knowing the distinction between these terms is essential for prospective buyers to make informed decisions, understand their rights and responsibilities, and ensure a smooth ownership experience. In this blog, we will explore the differences between limited common elements and deeded usage and highlight the importance of consulting legal descriptions before finalizing a real estate purchase.

Limited Common Elements:

Limited common elements refer to spaces within a joint property that are designated for the exclusive use of specific homeowners. These spaces are considered part of the common areas of the property but have limitations on who can utilize them. Examples of limited common elements commonly seen in residential communities include parking spaces, storage units, and outdoor areas such as balconies or patios.

Ownership and Taxation:

In the case of limited common elements, it's important to note that while homeowners have the right to use these spaces, they do not possess actual ownership. As a result, they are typically not responsible for paying taxes on these elements. However, it's essential to review the governing documents and consult the legal description to confirm the exact terms and responsibilities associated with limited common elements in a specific community.

Deeded Usage:

Deeded usage, on the other hand, grants owners exclusive ownership rights to a specific space within a property. This type of ownership is legally recorded and can be bought, sold, and transferred like any other property. Deeded usage is commonly seen with parking spaces, storage units, or outdoor areas that are clearly delineated and specified in the property's legal documents.

Ownership and Taxation:

With deeded usage, owners have full ownership rights and are responsible for paying property taxes on the deeded space. These taxes are assessed based on the value and classification of the property, similar to other real estate holdings. It's essential to understand the tax obligations associated with deeded usage and ensure compliance with local regulations.

Consult Legal Descriptions:

Before finalizing a real estate purchase, it is crucial to consult the full legal description of the property. The legal description provides detailed information on the ownership rights, restrictions, and responsibilities associated with different spaces within the property. It will clearly define whether certain elements are limited common elements or deeded usage, helping buyers understand what they are acquiring and any associated obligations.

🏢 Daryl Judy – Associate Broker, Washington Fine Properties
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