community association
legal entity in which the owners enjoy the protection, enhancement, maintenance & preservation of their homes &
... [Show More] property
community association has 3 defining characteristics
Membership in the community is mandatory & automatic for all owners; certain association docs bind the owner & the association to each other through mandated actions; mandatory lien-based assessments (maintenance fees) are levied on each owner in order to operate & maintain the community assocation
lien
legal claim by one party (community association) on the property of another (delinquent owner) to obtain the payment of a debt or the satisfaction of an obligation.
What does the lien do?
Placing a lien on an owner's property protects the community association's interests. It encourages payment of the debt. Consequence of lien is the owner cant sell or transfer the unit without settling the debt.
Purpose of a community assocation
to provide for the community, business, & governance aspects of the association. This is achieved by administering, maintaining, & enhancing a residential real estate development, and through the establishment of a system of property rights, binding covenants & restrictions, & rules & regulations.
3 basic types of residential community associations (1)
Planned community; owner owns his unit ; community owns any common areas such as tennis courts, for the use & benefit of the lot owners
second type
Condominium; owner owns his living unit & an undivided interest in the common elements of the community. Each owner owns a % of the common elements, which consist of everything except the living units.
third type
Cooperative; person owns stock or membership; holds a proprietary lease or occupancy agreement for his living unit
Proprietary lease or occupancy agreement
defines the member or stockholders' rights & obligations in relation to the living unit. The community association owns all of the real estate as a not-for-profit corporation.
3 types of residential community associations can exist by themselves or can be group in clusters called:
Master or umbrella associations: consists of more than 1 residential community association.
Second type
Mixed-use development-consists of a mixture of residential & commercial &/or industrial uses grouped together.
Third type
55 & older communities; must have 1 person who is 55 of age or older living in at least 80% of occupied units.
Sources of legal obligations for a community association
Federal, state & local statues, regulations, & case law
second source
legal documents unique to the community association that bind the association & its owners
third source
lender requirements; requirements set by secondary institutions (ex; FHA, Fannie Mae)
fourth source
standards set by professional bodies; ex: auditing standards set the American Institute of CPAs
Types of Federal Laws applying to community associations
Equal employment opportunity commission (EEOC); federal govt prohibits discrimination against otherwise qualified people in hiring, promotion, dismissal, based on specific characteristics like race & ethnicity, age, color, gender, religion
second federal law
Fair Debt Collection Practices act: protect debtors from unscrupulous debt collects & to impose a consistent & fair method to collect debts.
third federal law
Fair Labor & standards act (FSLA); dictates standards for the basic minimum wage & overtime pay
fourth federal law
Family & Medical Leave Act (FMLA); requires employers of 50 or more employees to provide up to 12 weeks of unpaid, job-protected leave to eligible employees for birth or adoption of a child or serious illness of the employee or spouse, child or parent.
fifth federal law
Federal Insurance contributions act (FICA)
sixth federal law
Occupational Safety & Health Act (OSHA)
7th federal law
US Bankruptcy code
8th federal law
Fair housing Act
Highlights of fair housing act
Reasonable accommodations/modifications; they created a new class of protected individuals - those w/ disabilities
Maintenance: a person with a disability can sue the association for failing to maintain physical components of the community needed by the resident.
Pets/Service Animals; No difference between having a pet to help with physical disability or mental disability
State Statues
Statutes are laws written & adopted by legislatures or administrative agencies: 3 types of state statutes that apply to community associations:
General State Statutes
One that applies to community associations, as well as to other types of organizations
Specific state statutes
One that applies only to 1 or more types of community associations
Uniform state statutes
National conference of commissioners on uniform state laws draft generic, content-specific wording for topical issues to encourage uniformity among the states
Governing Documents of community associations
purpose: to provide legal structure & operation of the community
the documents do 4 things:
define the rights & obligations of both the community association & its owners
create a binding relationship between each owner & the community association
establish the mechanisms for governing & funding the community association's operations including the establishment of automatic lien
set forth rules & restrictions for the: protection of both owners & the community; enhancement of property values; promotion of harmonious living
General hierarchy of authority for governing docs
If there are conflicts between docs, the document that is here in the hierarchy would prevail. The higher a document's place in the hierarchy, the greater its legal weight in a court of law
Recorded map, plat or plan
Help define an owner's or a community's tile to property
Declaration, CC&Rs, master deed
Declaration brings the condo or planned community into existence because it spells out the essential elements of ownership
Proprietary lease or occupancy agreement
Used in cooperative; defines the member or stockholder's rights & obligations in relation to the living unit
4 parts to the proprietary lease or occupancy agrmt
1. identifies premises that stockholder is permitted to occupy exclusively. 2. Defines the term of the lease & rent that is payable by the stockholder. 3. establishes the powers & obligations of the cooperative's board of directors, including assessment rights. 4. defines events which would result in the termination of the proprietary lease
Articles of Incorporation
Community association's corporate structure is established when a developer's attorney creates the association's governing docs. Attorney may file articles of incorporation with the state [Show Less]