M100 WITH COMPLETE SOLUTIONS 100%
Community Association
a legal entity in which the owners enjoy the PROTECTION, ENHANCEMENT, MAINTENANCE and PRESERVATION of their homes and property.
3 Defining Characteristics of a Community Association
1. Membership in the community is MANDATORY and autom...
M100 WITH COMPLETE SOLUTIONS 100%
Community Association
a legal entity in which the owners enjoy the PROTECTION, ENHANCEMENT, MAINTENANCE and
PRESERVATION of their homes and property.
3 Defining Characteristics of a Community Association
1. Membership in the community is MANDATORY and automatic for all owners.
2. Certain association governing documents bind the owners and the association to each other
through mandated actions.
3. Mandatory lien-based assessments (maintenance fees) are levied on each owner in order to
operate and maintain the community association.
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Lien
a 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.
>Placing a lien on an owner's property protects the community association's interest. It encourages
payment of the debt.
Purpose of a Community Association
to provide for the COMMUNITY, BUSINESS, and GOVERNANCE aspects of the association.
>This is achieved by administering, maintaining and enhancing a residential real estate development,
and through the establishment of a system of property rights, binding covenants and restrictions, and
rules and regulations.
3 Basic Types of Community Associations
1. Planned Community - An owner owns his lot/unit and the community owns common areas.
2. Condominium - Individual owns his living unit and owns an undivided interest in the common
elements.
3. Cooperative or Stock Cooperative - Individual owns stock or membership in the cooperative and
owns a proprietary lease or occupancy agreement for his living unit.
>A proprietary lease or occupancy agreement defines the member or stockholder's rights and
obligations in relation to the living unit. For most cooperatives, the community association owns all of
the real estate as a not-for profit corporation.
3 Types of Residential Community Associations that can exist by themselves or can be grouped in
CLUSTERS called:
1. Master or Umbrella Associations - consists of more than one residential community associations.
2. Mixed-Use Development - consists of a mixture of residential and commercial and/or industrial
uses grouped together. Their marketing slogan is often "live, work, play."
,3. "55 and Older" Communities - must have one person who is 55 years of age or older living in at
least 80% of its occupied units.
Sources of Legal Obligations of a Community Association
-Federal, state and local statutes, regulations, and case law (court decisions).
-Legal documents unique to the community association that bind the association and its owners.
-Lender requirements - for example, requirements set by secondary mortgage institutions (FHA,
Fannie Mac, Freddie Mae, etc.)
-Standards set by professional bodies - for example, auditing standards set by the American Institute
of Certified Public Accountants.
Additional Legal Obligations of Community Associations
-Equal Employment Opportunity Commission (EEOC) - protects against discrimination.
-Fair Debt Collection Practices Act (FDCPA) - protects debtors from unscrupulous debt collectors and
to impose a consistent and fair method to collect debts.
-Fair Labor and Standards Act (FSLA) - dictates standards for the basic minimum wage and overtime
pay.
-Family and 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 the birth or adoption of a child or
serious illness.
-Federal Insurance Contributions Act (FICA) - requires employers and employees to make matching
contributions to social security.
-Occupational Safety and Health Act (OSHA) - prevents injuries.
-Soldiers' and Sailors' Civil Relief Act of 1940 - delays civil court actions.
Additional legal Obligations of Community Associations cont.
-US Bankruptcy Code - helps honest people and business find a way to pay their debt or get a fresh
start.
-Federal Communications Commission (FCC) - overrides a community association deed restriction that
bans satellite dishes and antennae from property that is exclusively used, controlled or owned by the
resident.
-Fair Housing Act - prohibits discrimination in the sale, rental, financing insuring and other housing
related services.
3 Types of State Statutes
1. General State Statutes - applies to community associations, as well as to other types of
organizations (Regular, corporate or not-for-profit).
2. Specific State Statutes - applies only to one or more types of community associations. The specific
state statutes take precedence.
3. Uniform State Statutes - the national conference of commissioners on uniform state laws has
attempted to standardize specific state statutes like: Uniform Condominium Act, Uniform Planned
Communities Act, Model Real Estate Cooperative Act, Uniform Common Interest Act.
Governing Documents
to provide for the legal structure and operation of the community.
>Define the rights and obligations of both the community association and its owners.
>Create a binding relationship between each owner and the community association.
>Establish the mechanism for governing and funding the community association's operations
including the establishment of the automatic lien.
>Set forth rules and restrictions for the: protection of both owners and the community, enhancement
of property values and promotion of harmonious living.
, General Hierarchy of Authority for Governing Documents
-Recorded map, plat, or plan (to show precise location of units, lots, and/or common area.
-Declaration, CC&R's, Master Deed
-Proprietary lease or occupancy agreement
-Articles of Incorporation (if incorporated)
-By-Laws
-Board Resolutions (cannot conflict with documents above it in the hierarchy.
Recorded Map, Plat, or Plan
a map or plat or plan that is recorded in the county or parish (or similar jurisdiction) recorder's office
before any lots or units shown on it are sold. The purpose is to show the precise location of each lot,
or unit, as well as the common elements.
>A map or plat or plan may help define an owner's or a community's title to property.
Declaration, CC&R's or Master Deed
the provisions in the declaration which define or limit the rights of ownership are often called deed
covenants or deed restrictions.
>More than any other single document, the declaration brings the condominium or the planned
community into existence because it spells out the essential elements of ownership.
>The condominium or planned community comes into existence when the declaration is filed in the
office of the local recorder of deeds or registrar of titles.
The Declaration, Master Deed or CC&Rs Generally:
-Defines the portions of the development owned by the individual owners and those owned by the
community association.
-Creates interlocking relationships binding all the owners to one another and to the community
association for the purpose of maintaining, governing and funding the development.
-Establishes standards, restrictions, and obligations in areas ranging from arch control to prohibitions
on various activities in order to promote harmonious living.
-Creates the administrative framework for the operation and management of the community
association, although many of the specific admin details are spelled out in the by-laws.
-Provides the mechanism for financial support of the community association through assessments.
-Provides for a transition of control of the association from the developers to the owners.
Proprietary Lease or Occupancy Agreement
in a cooperative, it defines the member or stockholder's rights and obligations in relation to the living
unit.
>Identifies the premises that the stockholder is permitted to occupy exclusively.
>Defines the term of the lease and the rent that is payable by the stockholder.
>Establishes the powers and obligations of the cooperative's board of directors, including assessment
rights.
>Defines the events which would result in the termination of the proprietary lease.
Articles of Incorporation
a community association's corporate structure is established when a developer's attorney creates the
association's governing documents. The attorney may file articles of incorporation, sometimes called a
corporate charter with the appropriate state corporation agency.
>Brings the corporation into existence.
>Defines its basic purposes and powers.
>Indicates whether stock will be issued.
>Indicates the # of board members & identifies the initial board.
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