A Primer on Community Association Living

Common Pool

With the rise of urban centers and the need and desire of people to live closer and closer together, there became an increasing need not only for actual structures such as apartments, condominiums, high rises, and suburban developments, but also a need for legal structures to govern the behavior of the people suddenly living in ever closer proximity to each other.  The legal structure came in the form of common interest communities, which were governed by contracts also known as declarations of covenants.

Imagine for a moment that you lived in a rural county, where each property owner owned acres of land.  If your neighbor happened to own a helicopter, his flying and landing that helicopter on his property probably wouldn’t be too much of an annoyance, and even if it was, there would be little that you could likely do about it.  A mere annoyance that doesn’t rise to the level of a legal nuisance, offers little protection to the annoyed homeowner.

However, where two owners live in a common interest community such as a condominium, which is governed by a contract called the declaration of condominium, the act of landing a helicopter on or around the condominium property may be a prohibited annoyance due to it being in violation of the declaration of condominium.  In fact, that was the conclusion of a Judge in a 1977 case, in the state of Florida, involving a condominium and one owner’s use of condominium property to fly and land his helicopter.  In that case the judge stated,

…inherent in the condominium concept is the principle that to promote the health, happiness, and peace of mind of the majority of the unit owners since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property. Condominium unit owners comprise a little democratic sub society of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization.

Thus, by choosing to live in a common interest community, people give up their rights to act as freely as they normally would in a rural living situation. Because they live in such close proximity, the actions of the residents affect their neighbors in ways that they would not in other more traditional living situations.

There are benefits to living in common interest communities.  For instance, all of the residents share in the maintenance, upkeep, landscaping, and other costs that normally would fall directly on the individual owner.  In addition, they can share in the cost of various amenities which they otherwise would not be able to enjoy or afford on their own, such as: pools, playgrounds, tennis courts, gyms, and more. 

Other advantages include:

  • Protection of property value
  • Uniformity and attractiveness of the community
  • Dispute resolution for neighbors
  • Shared maintenance costs
  • Parking Restrictions
  • Amenities such as pools, tennis courts, and workout facilities

Disadvantages include: 

  • The major disadvantage of living in an association governed community is the loss of freedom. There are rules and regulations that must be complied with.  For example, many communities require that plans be submitted and approved in advance of making any landscaping or architectural modifications. 
  • Assessment fees. The association must collect regular assessments from members in order to pay for the maintenance of the common property and any other amenities within the community.

Types of Common Interest Communities 

The types of communities that are covered in the Prelicensure Course and that appear on the state pre-licensure exam are: Condominiums, Cooperatives, Homeowner’s Associations, Timeshares, and Mobile Homes.  Condominiums and cooperatives are usually similar in structure; they typically are constructed similar to typical apartment buildings.  The method by which the members own the property is what distinguishes them.

In condominiums the residents do not own the actual home or unit, but rather, they own the air inside of the unit.  That sounds strange but it is true.  Owners do not own the walls, or the ceiling, or the floor, but instead own the air space within the walls, ceiling, and floor.  In addition to owning the air space within the condominium unit, an owner also owns an undivided interest in the common elements or common areas. The interests in the common elements are said to be appurtenant to the unit, meaning it comes with the unit.  An undivided interest means that the owner of the unit owns all of the common elements that it shares in ownership with the other owners of the units within that condominium. This means that the owner does not own a fraction of the common elements, but instead they own the entirety of the common elements, but they own it with all the other members of the association, who also own the entirety of the common elements.

For example, if the community has a pool, that pool is a common element of the condominium. Imagine if all of the members of the association only owned a fraction of the pool, meaning that they have to share the pool with everyone else but they could only use the fraction of which they owned. That would lead to a very strange situation where the individual owners were only able to swim in some small section of the pool.  This is why the owners are said to own an undivided interest in the pool.  Every owner owns the entire pool, rather than just a fraction.

Cooperative living is a unique form of ownership where the owners do not actually own the property in which they inhabit. Instead, cooperative owners own shares in a corporation which is the cooperative. The entire building, units, and common areas are owned by the corporation, while the individual homeowners only own shares in that cooperative corporation. The reason many consider it to be a less desirable form of ownership is because, (1) you do not actually own property, which is one of the biggest benefits of purchasing real estate in the first place, (2) it can be difficult to sell the property because new purchasers need to be approved by the other shareholders in the corporation, and (3) if other shareholders in the corporation are unable to contribute to the cooperatives maintenance fees, then the remaining shareholders will have to pick up the slack in order to pay for maintenance.

In a Homeowner’s Association or HOA, the owner typically owns the house and the property that the house sits on, extending out to the roadway. The roadway is typically owned by the association as a common element or it is publicly owned by the municipality where the community sits.  The common areas such as a community pool, playground, and entranceway are typically owned by the association, as opposed to the shared ownership that comes with condominium common elements.  HOA‘s often have rules and requirements, which can be found in the declaration, requiring certain aesthetic requirements regarding landscaping and appearance of the home that the owner must adhere to or risk being fined.

Timeshares and mobile homes are two of the lesser talked about ownership arrangements in the community association management field.  Timeshares is an arrangement where several joint owners have the right to use a property as a vacation home, under a timesharing agreement. A mobile home, is a residential structure, transportable in one or more sections.

That is the various types community association living arrangements in a nutshell.  If you are not already in the community association management industry, I hope that gives you at least an idea of the concepts that impact those involved in community associations.  If you would like to learn more about the specific laws, concepts, and guidelines governing community associations; or if you are seeking to become a licensed community association manager, check out our 18-Hour Prelicensure CAM Course.  Thanks!

 

 

Community Association Management Professional Outlook

 

The continued growth in population and suburban development in Florida gives reason to be optimistic about job security in the community association management profession.  According to www.caionline.org Common Interest Communities continue to be growing at an ever increasing rate across the United States. In 2014 approximately sixty-seven million residents lived in almost 334,000 communities. Homeowners’ Associations account for 51-55% of the total, condominium communities for 42-45%, and cooperatives 3-4%. In the State of Florida alone there are 47,100 common interest communities or associations, with nearly 8 million residents living in such associations. Nearly 20% of the US population lives in community associations, while the value of homes in those community associations total to almost five trillion dollars.

Nearly seventy percent of community associations are managed by professional community association managers or management companies. There are approximately 8,000 community association management companies and up to 100,000 individuals employed by management companies.

In 1970 there were only 10,000 community associations. As the population continues to grow more people migrate to urban centers.  This, in part, has been facilitated by the ability to transport food and goods over longer distances. So long as this trend continues, people will need more and more options for affordable housing and property ownership, there will be continued growth in condominium living, and suburban developments surrounding urban centers will become homeowners and condominium associations.

The average salary of a community association manager is between $45,000 and $50,000 s a year, with the opportunity to make much more depending on skill, expertise, and level of competency. There are two distinctive types of managers: portfolio managers and on-site managers.

  • Portfolio managers typically work for a management company and manage multiple communities. They are usually paid on a commission basis, meaning they earn a percentage of each contract that the management company has with the community associations which that manager oversees.
  • On site managers are often employed directly by the association but may also work for a management firm.  On-site managers do not work from a satellite office like portfolio managers, hence the name “on-site”.  The types of associations managed by on-site managers tend to be larger and more upscale communities than what would typically be managed by a portfolio manager.

With the continued growth in population there is likely to be an increased need for community association managers, which means increased job security for those in the profession.  Florida’s population has been estimated to increase by as much as 6 million people by 2030.  If you are a Florida resident, then you have already seen with your own eyes the seemingly non-stop growth of urban centers and the sprawling out of cities into suburbs.  Nearly all of the communities being built today are governed by homeowners’ associations.  If you have been considering entering into the field of community association management, you may very well be on the right track.