CH 5-3: Common Interest Ownership (31)

One where owners share maintenance costs for property elements that all of them access and use.

Common Interest Ownership Community

Real property, and owners hold a fee simple estate deed to the interior space of their individual condo unit. For that reason, their ownership interest in a unit is sometimes referred to as an "air lot," particularly when referring to units in high-rise buildings.

Condominiums

Are the land and improvements that all residents use and own as tenants in common.

Common Area

These laws make it possible to define actual ownership rights. This, in turn, makes it possible for lenders to provide mortgages on condominium units and for tax authorities to assess individual property taxes, among other things.

Horizontal Property Acts

The person, corporation, or other entity directing the sale and development of a new condominium is generally called a __________.

developer || sponsor

What are the 2 types of deeds that reflect the ownership of condosl?

master deed || unit deed

Rules and regulations that govern condominium management and maintenance.

Bylaws

This document defines the condominium association as a corporate entity to provide some personal protection against legal liability.

Articles of Incorporation

Condominium developers create this general plan of private restrictions for the community. For example, this plan might stipulate that owners cannot paint their front doors specific colors or install a satellite dish or that they can only decorate the condo exterior with white holiday lights or use a particular type of patio furniture.

Covenants Conditions and Restrictions (CC&Rs)

Monthly fees collected from condominium or cooperative owners for common area expenses such as utilities, management, building maintenance, hazard and liability insurance for the property's common areas, and other amenities.

Association Fees

A form of property ownership, typically for resort properties, in which several buyers purchase or lease an interest in the same property.

Timeshare

Properties developed for co-ownership where each co-owner has a separate fee simple interest in an individual unit, including the following:

• Roof

• Basement

• Ground directly beneath the unit

• Patio space

Townhomes

Another form of common interest ownership. Like a condominium, this is a structured ownership known as a legal entity. However, this is different from condos in several critical ways. While condo owners have fee simple ownership in their units, owners of these don't own real estate at all!

Cooperative (co-op)

This loan is similar to a mortgage loan, but it funds the purchase of shares, not real estate. As a result, co-op financing may be more challenging to obtain because not all lenders offer THESE loans.

share loan

A form of property ownership combining individual ownership of a unit with shared ownership of common areas.

Common Interest Ownership

The legal document that establishes a condominium and defines unit and common area boundaries.

Condominium Declaration

A building owned by a corporation in which residents own shares entitling them to occupy a unit.

Cooperative (Co-op)

The highest and most complete form of ownership in real property, potentially infinite in duration.

Fee Simple Estate

Common areas reserved for the use of one or more, but not all, unit owners in a condominium.

Limited Common Areas

The document recorded to establish a condominium; also known as Enabling Declaration or Declaration of Condominium.

Master Deed

A lease granting a co-op shareholder the right to occupy a specific unit in the cooperative building.

Proprietary Lease

TRUE or FALSE: Lisa owns a condo, which means her interest in the common areas is as a tenant in severalty.

FALSE: If Lisa is the sole owner of her condo, she owns only the interior of her unit as a tenant in severalty. Her interest in the common elements is as a tenant in common.

Which is LEAST likely to be an example of a common area in a condominium?

• Balcony
• Land
• Laundromat
• Swimming pool

Balcony

TRUE or FALSE: A condominium’s master deed establishes a condo owner’s ownership interest in their specific unit.

FALSE: Each unit owner has a unit deed that documents ownership of a specific unit. The master deed establishes the development as a condominium, identifies the common areas, and provides for the establishment of a condo board. Each owner is bound by the terms of the master deed.

TRUE or FALSE: Lara owns a condominium. When a candle catches her draperies on fire, the association’s hazard and liability insurance covers damage to Lara’s carpet, walls, and furniture.

FALSE: The condominium association’s insurance covers only the common areas and exterior of the buildings. Lara is responsible for purchasing insurance for the unit’s interior and her personal property.

TRUE or FALSE: Condominium bylaws may stipulate the color of decorative lights an owner can use on a condo’s exterior.

FALSE: Bylaws dictate the operation and management of the condominium association. They are intended to keep the community attractive and uniform and to protect market value. A community’s covenants, conditions, and restrictions (CC&Rs) may stipulate paint colors, landscaping, parking, fences, and more.

TRUE or FALSE: Opal lives in an apartment that a developer is converting to a co-op. The current residents have the first option to buy in, and Opal decides to take advantage of the opportunity. Once she buys in, she will own the airspace in her unit walls-in.

FALSE: When her building goes co-op, Opal will own shares of stock in the co-op. It is the co-op that owns the airspace in the entire building. As a co-op unit buyer, Opal has a proprietary lease, which is personal property.

TRUE or FALSE: Opal lives in a cooperative building and does not pay her required assessment. The other owners can put a lien on her unit.

FALSE:The other owners cannot put a lien on the property if Opal does not pay the required assessment. They could, however, start eviction proceedings.

TRUE or FALSE: Nationwide, individuals who sell timeshare properties must be licensed to sell real estate.

FALSE: Most states have specific statutes governing the sale of timeshares. Some states require sellers to have a real estate license to market and sell this form of ownership; others do not.

TRUE or FALSE: In townhome ownership, each co-owner has fee simple interest only in the airspace.

FALSE: A townhome fee simple interest includes both the airspace and the land beneath the footprint of the dwelling, unlike a condominium, which includes only the airspace.

YES or NO: Hank is interested in buying into a cooperative building. His financials are solid, and his references are golden. But at the board interview, he said something that offended board president Mimi. She convinced the board to reject his application. Can the co-op board do this?

YES: As long as the board does not discriminate based on membership in a protected class, it can approve or reject any candidate for a wide variety of reasons. Remember, the primary purpose is to find a good fit for the building as a whole.