Real Estate Principles and Practices Chapter 13 Condominiums and Cooperatives 2010 by South-Western, Cengage Learning Key Terms Air lot Bylaws Common elements Condominium Cooperative Declaration Homeowners association Horizontal Property Act Master deed Proprietary lease Time-sharing Townhouse Unit conversions Vacation license 2010 by South-Western, Cengage Learning Overview Condominium Word derived form Latin for exercising domain with others Individual ownership of single-family unit with joint ownership of common areas 2010 by South-Western, Cengage Learning Overview Condominium Townhouse Cooperative Time-share Vacation license 2010 by South-Western, Cengage Learning Creation of a Condominium Regime Master deed Master deed and declaration are filed Regime: Regime: governing system of a condominium complex Declaration Converts property to single deed estates Description of units & common area Establishes undivided interest percentages Places authority with BOD homeowners association of homeowners association 2010 by South-Western, Cengage Learning Creation of a Condominium Regime Horizontal Property Act: Horizontal Property Act: provides for ownership of a specific unit with an undivided interest in the whole area 2010 by South-Western, Cengage Learning Condominium Ownership 2010 by South-Western, Cengage Learning Single-family Residence 2010 by South-Western, Cengage Learning High-rise Condominium 2010 by South-Western, Cengage Learning Creation of a Condominium Regime Declaration: Declaration: states covenants, restrictions, and conditions Bylaws: Bylaws: provide for homeowners association Developer controlled until no longer majority owner 2010 by South-Western, Cengage Learning Creation of a Condominium Regime Articles included in bylaws: Responsibilities of officers and directors Owners obligations Assessments and fees Establishment of operating budget Establishment of operating budget Rules governing recreation areas Rules governing recreation areas Provision to maintain insurance Provision to maintain insurance 2010 by South-Western, Cengage Learning Creation of a Condominium Regime BOD and officers are elected by the members Governing body provides for: Operating budget Operating budget Collection of charges and assessments Collection of charges and assessments Notice to lenders of unpaid assessments Notice to lenders of unpaid assessments Rules for common area Rules for common area Rules for recreational areas Rules for recreational areas Refuse collection, water, sewer, and Refuse collection, water, sewer, and outside lighting outside lighting The Association 2010 by South-Western, Cengage Learning Creation of a Condominium Regime Funds for unexpected expenses Buyer should ask for financial statement Owners responsible for deficits Reserve Funds 2010 by South-Western, Cengage Learning Creation of a Condominium Regime Individual deed in fee simple title Separately assessed taxes Ability to individually mortgage Title insurance Interest in common areas and facilities What the Condominium Owner Receives 2010 by South-Western, Cengage Learning Creation of a Condominium Regime Levied against individual units Dues assessed by the ratio of the individual unit to the total units Delinquency fees for unpaid dues Foreclosure Taxes and Assessments 2010 by South-Western, Cengage Learning Creation of a Condominium Regime Common elements: land and exterior surfaces Interior common areas Recreational area Limited common element: limited to an individual owner Limited and Common Elements 2010 by South-Western, Cengage Learning Creation of a Condominium Regime 1. Amenities 2. Reduced maintenance 3. Security 4. Peace of mind during absence 5. Camaraderie 6. Social involvement The Best of Both Worlds 2010 by South-Western, Cengage Learning Creation of a Condominium Regime 7 7. Pride of ownership 8. More living space 9. Minimized upkeep 10. Location The Best of Both Worlds 2010 by South-Western, Cengage Learning Creation of a Condominium Regime 1. Lack of privacy 2. Limited private outdoor space 3. Restrictions and rules 4. Majority rule 5. Parking The Best of Both Worlds 2010 by South-Western, Cengage Learning Conversions Change the use of real estate % of condos were conversions Deferred maintenance concerns Urban area conversions include old warehouses, offices, school buildings Disclosure on resale required in some states 2010 by South-Western, Cengage Learning Cooperatives Purchase stock in a nonprofit corporation, partnership, or trust Principal asset is the building Proprietary lease: Proprietary lease: occupancy of a particular unit 2010 by South-Western, Cengage Learning Cooperatives Shareholder is responsible for pro rata share of expenses Tax deductible Default by one results in risk for all stockholders Shareholders determine who may purchase stock 2010 by South-Western, Cengage Learning Time-Sharing Time-sharing: Time-sharing: joint ownership Buying time Legal structure for time-sharing plans Buying an amount of time Buying the right to use 2010 by South-Western, Cengage Learning Time-Sharing Interval ownership Undivided interest in a particular unit Tenant in common with other buyers of the unit Resort Areas Annual assessments 2010 by South-Western, Cengage Learning Exchange Programs Time share owners swap time Pay membership dues Guaranteed vacation not investment