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Condominium Forms - HOA & Condo Associations, Owners



Rights of a Condominium Association, HOA, and Unit Owners

A condominium or condo is a type of housing where a portion of an apartment or house is separately owned by individuals and rights over common facilities like elevators, walkways, and heaters are shared. The condominium homeowners association jointly has ownership of the entire land and has control over common utilities. The land where the building or apartment stands is jointly owned and is common land. Thus, within a single condominium, several units are contained, and they are owned and used separately with common equipment (heater system, etc.), common facilities (backyard, etc.), and common land (place where the entire building stands).

In order to establish a condominium, you have to record a master deed executed and accepted by all owners or lessees before the county recording officer of the county where the building of condominium is located. A master deed should have the following information:

  • A statement formally submitting the land to the purview of the condominium act.
  • Legal description of land that is being submitted to the purview of the condominium act.
  • A name for the condominium that includes the word "condominium" or followed by "a condominium" (for example: "Divine Retreat Condominium" or "Divine Retreat-a condominium")
  • Description of the plan of the condominium property.
  • Identification of common as well as limited common elements (limited common elements are common elements that are enjoyed by some, but not all the unit holders.)
  • Identification of each unit by a name or number.
  • Description of proportionate and undivided interest in the common elements and limited common elements of each unit.
  • Description of unit-holders' voting rights.
  • Bylaws that will govern the activities of the building.
  • Details of the condominium association like name and nature, whether incorporated or not, etc.
  • Method of amending the master deed.
  • Description regarding how common expenses shall be paid for by the different unit members and how common surplus will be owned.
  • Description regarding any covenants and restrictions over unit holders' rights (for example if there is a prohibition against leasing for commercial purposes, etc.)

As a purchaser, you must understand that a condominium association and developer are not one. Initially, it may seem that the developer is also the association. Conflicts may arise at a later stage when the rights mentioned in your agreement for sale with the developer fail to be included in the condominium declaration that details rights of unit holders. Therefore, once you buy a condo, you must make sure the rights granted to you by the developer are included in the declaration of rights issued by the HOA. The condo association mentioned in the master deed acts like a homeowners association and will be responsible for the condominium property and to carry out activities for the common interest of the condominium and its unit holders. The elected association is also responsible to deal with problems arising out of conflicts with neighborhood associations.

Every HOA and condominium will have a declaration of covenants that dictates what unit holders are permitted to do and restricted from doing with the common facilities/areas. A set of conditions, covenants, and rules that govern a condominium is called the CCR. A CCR is a document that governs the rights and duties that a condominium association and unit holders mutually have.

If your condominium is situated by the beach, you might want to operate it as a beach resort. If a condominium building is intended to operate as a resort, laws governing its function are different. The condominium, vacation ownership, timeshare, and resort law stipulates various provisions with regard to the establishment and various regulatory filings that will be applicable to such condos.

More than the location, the acceptability of a condo is determined by the how it is owned and maintained. Therefore, whether you are looking at a condominium for rent or a condominium for sale, make sure you check out the condominium laws of the area, as well as go through the bylaws of the condominium, and confirm that they will provide you with a hassle-free stay.

FHA Condo Loans

You can look at securing a Federal Housing Administration (FHA) condominium loan to finance your purchase. However, the loans are more complicated than other property loans because of the stringent conditions for a condo loan stipulated by the FHA. Therefore, it is always better to go for FHA approved condos. In order to be FHA approved, a condo must satisfy the following basic requirements:

  • It must have at least two units.
  • It must have hazard liability coverage.
  • It must have all applicable insurance.
  • It must conform to all requirements of the concerned state law as well as other applicable laws.