CONDOS, HOAs, AND CO-OPS
WHAT'S THE DIFFERENCE?
CONDOS, HOAs, AND CO-OPS----WHAT’S THE DIFFERENCE?
The difference is that there are the 3 types of residential community associations:
- CONDOS: In a condo, the individual owns:
- His or her living unit
- An undivided interest in the common areas and facilities of the condo
- The condo association owns no real estate.
- HOAs: In an HOA, the individual owns:
- His or her lot and/or living unit
- The HOA owns the common areas and facilities.
- CONDOS: In a co-op, the individual owns:
- Stock or membership in the co-op
- Holds a proprietary lease or occupancy agreement for his or her living unit
- The co-op owns all real estate, including the units.
Co-ops are becoming less and less popular. They may disappear altogether over time, so let’s just look at the difference between condos and HOAs.
Governance
Do condos and HOAs have the same types of governing documents?
Condos HOAs
Governed by General State Statutes X __ X
Governed by Specific State Statutes X____________________
Are defined as Planned Communities X
Have a Declaration of Condominium Ownership X _ _ __
Have a Declaration of Covenants, Conditions ___ X
and Restrictions
Have Bylaws _ X __ _ X
Have Master Deed X __ X
Have Articles of Incorporation (if incorporated) X __ X
Responsibilities
Are owners’ responsibilities different in condos and HOAs?
Yes, some are. Based on the above definitions, some of the responsibilities of the owners and the association will differ. Here are some of the differences:
Condos HOAs
Repair, maintenance, replacement Association Owner
of building exteriors
Landscaping and snow removal Association Owner
Road repair and replacement Association Local Gov’t.
Exterior pest control Association Owner
Similarities between condos and HOAs
- Both are not only communities, but businesses.
- There is a Board of Directors, elected annually by the membership.
- Both may have committees.
- There are Board of Directors’ and owners’ meetings.
- Both may have rules regarding conduct and architectural changes.
- Each has financial reporting requirements.
- The owner assessments (maintenance fees) are established by the budget.
- Both have bills to pay for the common services.
- Both may employ a management company or be self-managed.
- Each may or may not have recreational facilities.
Some of the benefits of living in a condo
The condo association takes care of:
- Landscaping, fertilization, snow removal, pest control, etc.
- Maintenance of the building exteriors
- Maintenance of the common roads, driveways, walkways
- Provision for and maintenance of recreational facilities
The Board of Directors makes most of the decisions.
- Planned social activities
- Dispute resolution when owners infringe on each other’s rights
- Safety of owners and residents by installation of safety systems and procedures
The association collects the assessments (maintenance fees)
and pays for the services.
- This is similar to “budget billing”
- Assessments (maintenance fees) are for operating, maintenance and replacement expenses.
Retiring boomers and young professionals cause condominiums and HOAs to be the fastest growing forms of residential housing in the country. These associations have over 60 million residents, up from 2 million since 1970. The number of these communities has risen from 10,000 in 1970 to over 305,000 in 2009. Associations range in size from 2 units to 20,000 units in one association.
The estimated real estate value of all homes in community associations approaches $4 trillion, approximately 20 percent of the value of all U.S. residential real estate.
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