Who Owns The Common Areas In Your Building Or Community?

(This article is part of my Back-To-Basics series for Condos and HOAs. Last published about a year ago, here it is updated for the many new owners and residents in Florida Condominium buildings and HOA communities.)

As we get started, it is interesting to note that Florida's Condominium Act uses the term common elements, while the Homeowners Association Act refers to common areas. This difference in language is an important part of this week's topic.

Today's discussion refers to residential Owners Associations in which membership is included and/or mandatory when buying property in the building or community.

• In Condominium Associations, each individual unit owner owns an undivided share of the common elements.

• In Homeowners Associations, the Association's corporation owns the common areas.

This distinction may not seem like much at first, though it directly influences:

• Voting procedures and proxies
• Board of Directors authority and responsibility
• How financial reserves are handled
• Maintenance and repair responsibility
• How changes can be made to the shared property areas.

Common element/area ownership is one of the main reasons why Condominium and Homeowners Associations are regulated differently in Florida.

Condominium common elements are jointly owned by all the individual unit owners, so more oversight and protection are needed in order to safeguard owners' legal and financial interests and rights. The jointly owned portion of any condominium property is a fundamental, permanent element of owning an individual unit in the building.

Since Homeowners Association common areas are owned by the Association's corporation, individual owners can be partially insulated from some of those legal and financial issues that might affect condo owners. In this case, the shared-use portion of an HOA community might be considered more of an amenity or feature that goes along with living in that community.

"Bundled golf" and mandatory country club membership communities are a bit more complicated, though the ownership of HOA residential common areas (as described below) remains the same.

Florida's Department of Business and Professional Regulation (Division of Condominiums, Timeshares, and Mobile Homes) states: "A condominium is a form of real property ownership in which an individual owns a unit exclusively and owns common elements jointly with all other unit owners in the condominium." An individual unit's transfer deed acknowledges the condominium form of ownership and often directly references the shared ownership of common elements.

To simplify this concept, in a 100-unit condominium building each individual unit owner also owns a 1/100th share of all the common elements. That share cannot be separated from the other owners' shares, nor can it be separated from an individual unit. It is part of (appurtenant to) owning an individual unit and transfers to the new owner when a unit is sold. Speak with a Florida-licensed attorney for legal interpretation and application.

Common elements in a condominium property may include: Building Structure and Exterior, including Roof, Hallways, Office, Meeting and Fitness Rooms, Lobby Areas, Elevators and Mechanical/Electrical Equipment, Building Water Supply and Drain Plumbing, Stairways, Surrounding Grounds and Landscaping, Parking Lots and Structures, Swimming Pools and Decks, and Other Structures, Components, or Amenities on the property.

HOA communities usually include single-family homes and townhouses/villas with no shared ownership of the common areas. Property owners own individual parcels/lots and residences, not any part of the common areas. This is a major difference between HOAs and COAs in Florida.

Common areas in HOAs can include: Streets and sidewalks, Clubhouses and maintenance buildings, Landscaping in common areas and along streets, Guardhouses and Gates, Community Swimming Pools, and other Recreational Facilities and Amenities.

Unlike condo ownership, exterior maintenance and repair of each residence in an HOA is usually the responsibility of the property owner, not the Association.

You might be thinking that if the HOA corporation owns a community's common areas, and property owners are part of the corporation, all owners get to vote on how those common areas are maintained, improved, and managed. Not exactly.

Just about all Florida Condominium and Homeowners Associations are organized as Not-For-Profit Corporations under Florida Statutes Chapter 617. This is so they can engage in the legal and financial activities that contribute to proper Association operation. The elected Board of Directors runs the corporation in similar fashion as the Boards of major US for-profit corporations.

Elected Board members are also officers in the Association's corporation. The Association holds all shares of the corporation. Individual owners are members rather than shareholders.

This recent article expands on Board operation and officers' duties: Do Condo Board Presidents have more power than Vice-Presidents? - www.thefloridarealestateblog.com

Not all matters regarding COA or HOA common elements/areas are open to having all the owners vote on them. Since a Board of Directors is elected to manage the Association's business in compliance with either the Florida Condominium Act (FS 718) or Homeowners Association Act (FS 720) and an Association's own Governing Documents, Board members are able to make some decisions without a vote by all owners.

Example - If you own a few shares of Microsoft, Amazon or any other public company, you don't get to vote on every decision that comes before the corporation's Board of Directors. Florida Statutes Chapters 718 or 720 and the building or community's own Governing Documents provide the rules about which decisions a Board can make on its own, and which require an owner/member vote.

• Because condominium unit owners also jointly own the common elements, they have more input and voting rights on how those parts of the property are managed and maintained, especially when it comes to spending Association money.

• On the other hand, since HOA individual property owners do NOT jointly own the common areas, the Board of Directors has the authority to make more decisions on its own regarding maintenance, repairs, upgrades, and additions to common areas and structures within the community.

No matter how an Association's common elements/areas are owned, the Board is still fully responsible for making sure they are properly maintained. This includes monitoring common property physical condition and ensuring there is enough money available when maintenance or repairs are needed.

Every owner (especially newer ones) in a Florida condominium building or HOA-governed community has the responsibility to understand how their Owners Association is organized and how it functions. If you are not as familiar with your Association as you may like to be, use this article as a starting point, then look through your Governing Documents for specific guidance.

The keys to owning and living in an Association-governed building or community in Florida are education and participation. The more you learn about how your Association functions, the more comfortable you will be living in your building or community.

Editor's Note: Christopher Carter is NOT an attorney. He does not give legal advice. For interpretation and application to specific circumstances of anything you read in this article, you must speak with a Florida-Licensed attorney.

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