Overview of Condo Ownership
Condominium ownership comes with certain rights and responsibilities defined by the law. The law itself was carefully drafted to take into account the unique nature of a condominium and the individual owners’ rights and responsibilities, as well as the community as a whole.
A condominium is technically defined as a "form of real estate ownership whereby each unit in the development is individually owned and each owner has an undivided interest in the common elements and is entitled to use the common elements and may use the recreational and the other common elements only to the extent and in the manner provided in the declaration and the bylaws." 735 ILCS 609.2 (2009). While this definition is somewhat arid, it is significant and determinative of the following:
Generally, all components of the condominium, units and common elements included, are owned in common by all of the condominium unit owners . Each owner has a fractional interest in the common elements, meaning, each owner has equal rights to use and enjoy the common elements. No single owner holds exclusive rights to any of the common elements.
The main advantage of condominium ownership is not only the right to maintain and enjoy your own unit, but also the right to use and enjoy the common elements. However, the law also imposes strict limitations on such rights. The law appoints boards of directors, with members elected by the unit owners, to oversee and manage condominiums and their common elements. Boards are charged with maintaining and managing the common elements through the imposition of rules, regulations, assessments, and other means. 735 ILCS 609.10 (2009).
Condo Associations and Organization
Condo communities are typically governed by a condo association, which is comprised of a board of managers or directors that is elected by the unit owners of the community. While on an ongoing basis, control and responsibility for the management of the condo community is generally handed over to the board, it is important to keep in mind that the board members are ultimately accountable to the unit owners. Most states maintain a Department of Consumer Affairs or a similar agency that regulates the actions of condo communities within that state, and most associations are required to hold annual meetings to provide the unit owners with a report of the community’s financial health, as well as updates on projects and other matters that are pertinent to the condo community. The requirements for participation by unit owners and frequency of the regular meetings varies from state to state.
In addition to the periodic meeting requirements, most states require that the board members maintain several key Governing Documents for the condo community, which are required by statute to be made available to the unit owners. The Governing Documents for the condo community generally include the Declaration (which is the document that creates the condo community), the Bylaws, and the Rules and Regulations. Unit owners are encouraged, if not required, by state statute, to obtain copies of these Governing Documents so that they are familiar with their rights and responsibilities, as well as the rights and responsibilities of the board members. It is also important for condominium owners to make sure that they observe the rules and participate in the board’s decision-making process to ensure that their voices are heard.
Legal Rights and Responsibilities for Condo Owners
Condo owners have certain rights when it comes to their units and the common areas they live in. All owners have the right to peaceful enjoyment of their unit or of the common areas. They also have the right to access the common areas as necessary or appropriate. When there are meetings about the condominium or the condo association, owners have the right to be present and to participate. There are some restrictions on this, however, in the interest of privacy or to keep meetings effective.
The condo owner is not responsible for the maintenance, repair or upkeep of the common elements of the condominium. This responsibility falls to the condo association. If you are concerned about the upkeep or maintenance, you should contact the condo association board and let them know your preferences. It is not up to individual owners to address these concerns.
When it comes to the common elements of the condo, an owner has the right to use these spaces and should be allowed reasonable access to them. This means that you can enjoy the space for entertainment if desired, granted that you do not interfere with the rights of other condo owners.
While owners have many rights, they also must abide by the responsibilities that go along with those rights. According to the governing documents of the condo and the Florida Condo Act, all condo owners must: A condo owner does not sign away the right to privacy when they purchase a condo. They cannot be searched or have their property seized simply because they live in a condo.
In Florida, an HOA has the right to and often does carry insurance coverage on the common elements of a condo. Determining insurance coverage for condos requires an understanding of insurance provisions for condos. The homeowners association and all of its members should be covered under a general liability insurance.
HOA Fees and Assessments Explained
HOA fees and special assessments are regular monthly payments required of condo owners based on the amount of their ownership interest in the condo complex. The purpose of HOAs is to collect money in order to maintain and improve the common elements of the condominium and pay the expenses associated with running the condominium association. HOAs typically cover fees for such things as landscaping, snow removal and maintenance of the building’s exterior. In some cases, HOAs will also cover the costs for the water, electric and sewer bills for the common elements of the condo complex.
The fees paid by owners are calculated by a specific formula that is based upon a particular "unit’s" ownership interest in the condominium. Each unit of a condo complex has an "interest" value. This "interest" value is important because it determines what percentage of the common areas of the condominium an owner has the right to use, as well as how much the owner must contribute toward the payment of the common expenses. Generally, the larger the unit an owner has, the larger its interest in the condominium’s ownership. Conversely, a small unit would have a small interest in the common expenses.
The entire amount of money collected from the owners by a condominium association from these monthly fees is called the common expenses and must be used for the general upkeep of the building and its common elements. The amount of money the owners are required to contribute is based upon their respective ownership interests in the common elements of the condominium. For example, if an owner owns a unit that has a one percent interest in the common elements, that unit owner would be expected to pay only one percent of the common expenses, as the other 99 percent will be paid by the remaining condo owners .
In addition to the monthly fee, a condo association may levy a special assessment against the owners if the funds collected from the monthly fee do not cover the condo association’s operating expenses. A special assessment must be paid regardless of whether you use the special services or facilities provided. For example, if a condominium association’s parking lot is in need of repair, the association may put a special assessment on all the owners even if they don’t use the parking lot. Therefore, the responsibility of paying for these assessments falls upon all unit owners involved.
When a condo owner fails to pay its regular monthly fee or special assessment, the condo association has the right to collect that debt in court. It is important to emphasize, however, that failure to pay these monthly assessments and fees can impact your right to use the various amenities provided by the condominium association, like the pool, gym or parking garage. Failure to pay HOA fees and special assessments can also lead to the loss of your unit.
While missed monthly assessments and special assessments can result in the condominium association placing a lien on your property, keep in mind that condo associations have collection procedures they must follow. This generally requires that the condo association file the lien before using collection attorneys and before filing lawsuits. The general rule is that an association cannot foreclose upon a lien unless the amount owed is at least $1,000 (or more than three months of assessments) and the foreclosure lawsuit is filed within 6 years of the date the installments become due. The rights of an owner to the various amenities provided by the condo association cannot be revoked because an owner didn’t pay its monthly assessment or special assessment. However, retaining the association’s services or amenities can be an indirect way for an association to seek debt collection.
Resolving Disputes
As with any community of people, condo associations and owners are not immune from disputes. Common sources of conflict include noise complaints, maintenance issues, parking privileges, and questions regarding the community rules. Fortunately, there are ways to resolve these disputes.
Small claims court and mediation are two of the most common methods to do so. Most provinces have small claims courts that handle monetary claims between specified dollar amounts. These courts are more efficient than traditional civil courts and are specifically designed for less formal hearings, involving less complex matters, that are expected to hear a large percentage of cases that do not require legal representation.
The provinces and territories each have their own legislation that addresses small claims: Small claims courts generally follow similar procedures, including: (a) filing of a notice of claim and response; (b) a pre-hearing conference to address issues and gather evidence; (c) a hearing in front of one person (the judge) to hear the parties’ evidence; (d) an enforceable order made by the judge.
Most disputes that are filed with a small claims court are resolved without a formal hearing. Small claims courts offer various tools to resolve disputes prior to the start of a hearing, most commonly through what is called mediation. At this stage of the proceedings, a neutral third party will work with the parties to negotiate a solution. Both parties would have to agree to this alternative resolution process. If a solution is reached, the agreement is incorporated into an order of the court.
If no agreement is reached, the matter will proceed to be scheduled for a hearing in front a judge. While the parties are expected to appear at the hearing with or without legal counsel, legal representation is not necessary to be successful at a small claims hearing. Small claims courts and judges are meant to be user friendly.
In instances where the nature of the dispute may require the aid of legal counsel, condo owners also have access to the Court that addresses more complicated legal issues. For example, legal counsel are typically required to initiate arbitration with the Condominium Authority of Ontario. This type of alternative dispute resolution is mandatory under the Condominium Act, 1998 if the dispute can be resolved by an arbitrator. The Act also specifies types of claims that are not covered by arbitration. A few examples include most claims that go beyond $50,000, claims relating to contingent or mixed use condos, and claims against declarants (prior owners and/or developers).
Relevancy of State and Local Laws to Condo Ownership
Condo ownership is not only influenced by the condo association’s Declaration or Policies and Procedures. Unlike other types of communities, condos are primarily governed by state law. In 1998, the Condominium Act was amended to provide many of the legal protections and rights now enjoyed by individual owners. These protections extend to issues such as:
Importantly, new laws are frequently enacted which impact owners rights. In 2018, for example, a new lead based paint law was enacted to obligate owners’ associations to give notice to owners (and potential buyers) before performing work in a community building or any project that disturbs paint in residential units built before 1978. This notice requirement provides additional protection to a vulnerable population by ensuring that owners have the option to relocate children and infants during any work that could result in exposure to lead paint.
In 2021 , the Missouri Homeowners’ Association Act was enacted. This new law immediately impacts owners in homeowners’ associations, but not condos (the Missouri Condominium Act has not been revised as of this date). However, it is a reminder that new protections may always be on the horizon.
It is important for owners to be familiar with state and local laws which impact their community. Not doing so could result in the loss of a previously enjoyed right.