Condos, Coops, PUDs & Timeshares Chapter 23

Desire of Land-Use Efficiency Land Scarcity:  Incentive for Multi-unit configurations  Houses= 4 to 5 per acre  Cities: Little space w/in reasonable distance Benefits:  Carefree living – few chores  Security  Pools, tennis, etc. not affordable individually  Americans want to own not rent

Condominiums Must be legal framework for condo ownership Address the subdividing of airspace Can take any number of configurations  50 stories, two story garden apt, row houses, etc  Combine condos with retail & office space Separate & common elements Master deed for development w/ deeds for each unit Self Gov’t (all are members) w/ Board of Directors  Owners’ Association: Can be trust or unincorp’d Controls, regulate, maintain the common elements Rules for OA are bylaws – recorded w/ master deed Covenants, conditions & restrictions: i.e. house rules Many were rental apartments: Often w/ deferred maintenance

Condo Management & Finance OA employs a management company  Care day-day & duties set by OA OA assesses maintenance fees Each unit pays property tax & insurance  Generally no assessment for common area Each unit’s value reflects common area ownership Each unit financed separately  Terms are separate; Foreclosure separate Advantage: More units, more homeowners Disadvantage:  Close proximity; Collective decisions; Problem to building is everybody’s problem; Often have to serve on BOD, etc.

Cooperative Apartments Formed where condo laws were unavailable Formed a not-for-profit corporation Shares sold to tenants (cooperators) $ = down pmt & mortgage loan established  Often the cost and debt is very large & difficult Some states have tried to make this easier  This and cost of maintenance & insurance is very high Title in the name of the corporation Owners get lease to apartment Gov’t of building=Board of Dirs of corporation  Articles of incorporation + by laws + covenants, etc. No sale of unit, just sale of shares Few are being formed now that condo laws are in place

Planned Unit Development (PUD) Owners in PUD get:  Land  House on land  Ownership in community assoc. that owns common areas Covenants & restrictions are in place for each unit  Association can dictate many aspects of your house and lot  CCRs are meant to maintain value of all properties  Density restrictions (e.g., 8-10 uynits per acre PUDs are detached houses, common wall houses & row houses & townhouses

Resort Timesharing Dividing and selling living units at vacation facilities for specified lengths of time ea year Marketed by resort developers Timeshared: Hotels, motels, condos, townhouses, lodges, villas, RV parks, campgrounds, houseboats and cruise ships Right to use format:  Set fee for set time & all rights cease for buyer Fee simple:  Buyer obtains a fee ownership in unit & owns unit for set time into perpetuity & sale is like any RE sale Problems: Same place year after year; Costs; Fraud (e.g., projects not completed, deeds not sent, multi- sales of same unit & time)