Are you buying your condo from the condo association? If yes, then they can require 20% down, if they have in their by-laws or amendments. This is to make sure that the new condo owners will be financially sound and will pay required maintenance fee and assessments on time.
If you are getting a mortgage from a bank or a mortgage company, then it's the mortgage guidelines that they are referring to, which require 20% down in most cases. This money is your downpayment money and will be used by the title company to pay the seller, in accordance with your contract.
Please let me know if you have any other questions,
Beachfront Realty, Inc.