After successfully completing this topic, you will be able to
• define the term common elements, and
• list the four main documents of a condominium
Condominiums offer many benefits that have contributed to their popularity. The allure of included exterior maintenance, prime locations too expensive for single family homes, and the elements of social activity offered by condominium living are hard to resist. The growing trend of early retirement has provided a continuing market for condominium sales.
Condominium buyers receive a deed as evidence of ownership. The owner of the condominium gets a fee simple title to the condominium apartment, and an undivided share of the common elements as a tenant in common with other owners.
Common areas are undivided fractional shares of the structure and land owned by each unit owner. Examples of common areas include the lobby, swimming pool, elevators, and the building structure itself. Property taxes on the building and common elements are paid by the association. Owners pay property taxes directly based on the value of their units.
Each owner must pay common area expenses on a prorata basis. The percentage that the square footage of their unit bears to the total square footage of all units is the percentage of the common expenses that the owner pays.
Jane owns a condominium apartment that has 1,600 square feet. The total square footage in all apartments in the building is 198,400. The annual expenses of the property are $459,000. What is Jane’s monthly assessment for association fees?
Jane’s apartment area is .008065 of the property (1,600 ÷ 198,400) Jane annual association fee would be $3,701.61 ($459,400 x .008065). Her monthly assessment would be $308.47 ($3,701.61 ÷ 12 months)
Condominiums are organized with four main documents
• Declaration of condominium – creates the entity, identifies physical elements, names the association. It is also known as the master deed.
• Bylaws – govern the administration of the association.
• Map – describes and locates condominium units.
• Conveyance – transfers title to common areas by warranty deed.
Chapter 718, Florida Statutes, has specific wording that must be on purchase contracts regarding the required documents and a right to cancel the contract. If the wording is not on the purchase contract, the buyer can void the contract before closing. Buyers of condominiums have the right of rescission after signing a purchase contract. Buyers of newly constructed condominiums may cancel within 15 calendar days after receiving all documents. If it’s a resale condominium, the buyer has 3 business days to cancel.
The developer of a condominium with 20 or more units must give to buyers before the buyer signs a contract to purchase
• a prospectus that details the important parts of the other required documents.
• an estimated operating budget of the condominium owners’ association.
A private party seller (resale) must give the buyer
• the most recent year-end financial reports,
• rules of the condominium owner’s association, and
• a governance form that describes the duties of the board of directors and the owners’ rights.
Developers and private parties must also give a copy of the
• declaration of condominium,
• articles of incorporation,
• bylaws of the condominium association, and
• frequently-asked questions (FAQ) about the association.
|Private Party Resale||Developer (20+ units)|
|Most Recent Year-end financial report||Y|
|Articles of incorporation||Y||Y|
|Bylaws of the association||Y||Y|
|Frequently-asked questions (FAQ)||Y||Y|
|Estimate operating budget||y|