September 14, 2015
A condominium association means, in addition to any entity responsible for the operation of common elements owned in undivided shares by unit owners, any entity that operates or maintains other real property in which condominium unit owners have use rights, in which unit owner membership in the entity is composed exclusively of condominium unit owners or their elected or appointed representatives, and is a required condition of unit ownership. Fla. Stat. §718.103(2).
The association must be a corporation for profit or a nonprofit corporation under Florida law. However, an association that was in existence on January 1, 1977, need not be incorporated. The shareholders or members of the association must be the owners of the units. Fla. Stat. §
718.111(1).
The Condominium Act recognizes the need to create an entity to be “responsible for the operation of common elements owned in undivided shares by unit owners.” Fla. Stat. § 718.103(2). The Condominium Act, together with the declaration of condominium, articles of incorporation, and bylaws, also sets forth (1) the rights, obligations, and duties of a condominium association; (2) the relationship between the condominium association, the unit owners, and the developer; and (3) the regulation of other aspects of condominium association operations.
As a fundamental principle, the association is responsible for controlling the condominium property and serving as an operating entity that exists independently from the developer. Developers often forget that the condominium association is not an entity that can act as the developer directs without considering the consequences, even during the period of time when the developer controls the condominium association. Section 718.111(1)(a), Florida Statutes, specifically provides that the “officers and directors of the association have a fiduciary relationship to the unit owners.” This fiduciary duty to make decisions in the best interests of the condominium association and unit owners as a whole exists irrespective of developer control. See B & J Holding Corp. v. Weiss, 353 So.2d 141 (Fla. 3d DCA 1978) (initial board of directors who also were officers of developer held to have breached their fiduciary duty to association for failure to collect common expenses from developer).
With acquisition of title to a condominium parcel, a unit owner automatically becomes a member of the association that is empowered to manage and maintain the common elements of the condominium and certain other areas of the condominium property. Beyond management and
maintenance duties, however, the association exerts a relatively high degree of control over the property use rights of unit owners as compared to the rights of an unassociated single-family dwelling.
An association provides a vehicle by which individual owners may work together in a particular community to provide services and governance. The Association exercises certain regulatory and financial authority through assessing its members in accordance with the declaration of condominium and regulating their use of the common areas, common elements, and facilities of the community.
Florida's statutory definition of “association” contained in Section 718.103(2), Florida Statutes, includes not only those entities responsible for the operation of common elements owned in undivided shares by unit owners, but also entities that operate or maintain other real property in which unit owners have use rights when membership in the entity is composed exclusively of unit owners or their elected or appointed representatives and is a required condition of unit ownership. Sometimes referred to as the “constituency test,” this expanded definition of condominium association is a result of those condominium developments containing more than one tier of association where there may exist “master,” “community,” or
“umbrella” associations, each having specific reserved or delegated responsibilities relative to functions shared between other separately declared condominiums within the larger development. Typically, such a master association has fee ownership of areas of real property shared by several separately declared condominiums, such as common entries, common roadways, and recreational or other commonly used facilities. It is in these instances that the Florida Legislature has sought to provide the same statutory protections relative to the operation and financial and disclosure requirements as are afforded to individual condominium associations and their members. In master association communities, condominium associations would be considered the second tier of association commonly known as a “sub-association.” See Dept. of Bus. Regulation, Div. of Land Sales v. Siegel, 479 So.2d 112 (Fla. 1985).
Condominium associations should be thought of as the regime of unit owners who are empowered to run the condominium. Most of the powers and duties are delegated to a board of directors, except for those enumerated powers reserved for the Association by statute and the governing condominium documents. The Association elects the board of directors. Each unit owner owns his/her unit, traditionally an apartment style residence, and an undivided interest in the common elements, in accordance with the unit owners' percentage interest set forth in the declaration. Each unit has a separate parcel identification or tax identification number, but because the common elements are collectively owned, there is no
separate parcel identification or tax identification number for common elements.
The boundaries of a unit are found within the condominium's declaration and plats, and sometimes in the state statutes. Generally, the boundaries of the unit include the exterior surface of the unit's drywall inward and from the interior surface of the concrete floor slab upward, but may vary from condominium to condominium. Contained within the units, among other things, are all of the appliances serving only that unit, all plumbing located solely within the boundaries of the unit, and carpeting.
The maintenance, repair, and replacement responsibilities distinguish a condominium from an HOA. Although the Florida Statutes provide that the association is responsible to maintain the common elements and common areas, this obligation can vary by statute and according to the specific documents governing the particular association. For example, Section 718.113, Florida Statutes, provides that maintenance of a condominium's common elements is the responsibility of the association. However, the Declaration may provide that certain limited common elements shall be maintained by those entitled to use the limited common elements. Generally speaking, the condominium association is responsible for the maintenance, repair, and replacement of all of the general common elements, and the repair and replacement of the limited common elements. General common elements are available for use by every unit owner. General common elements often include the roofs, sidewalks, elevators, common hallways, lobby and community facilities. Limited common elements are portions of the condominium designated or assigned for the exclusive use of one or more, but less than all, of the unit owners. The designation of limited common elements is often found in the condominium's declaration or on the plats, and in some cases, the designation is within the discretion of the Board of Directors, as in the case of parking spaces. Common examples of limited common elements are balconies and patios serving a unit. The unit owner is frequently responsible for the maintenance, repair, and replacement of the unit, and for the maintenance of the limited common elements designated for that unit owner's exclusive use.
If the association documents so provide, the board of directors has the power to levy fines for violating condominium documents, impose late fees and interest on delinquent assessments, and charge transfer fees upon sale or lease up to the maximum amount permitted by law. Absent provisions in the association documents which grant the preceding powers to the board of directors, the documents may be amended to incorporate them.
Funding the operation of the condominium are assessments. Subject to some restrictions, the Board of Directors is responsible for annually determining the common expenses of the condominium. Each unit owner is assessed that unit owner's share of the common expenses based on the unit owner's percentage of ownership interest. The general rule is, the larger the condominium unit, the greater the proportional share of the common expense owed.
In Florida, the condominium association is required to be a Florida corporation. Fla. Stat. § 718.111(1)(a). The corporate form of association has been the predominant form throughout the United States for essentially the same reasons business entities may take the corporate form
over other alternatives — reasons that include limited liability, legal recognition, tax benefits, and certainty of internal structure governed by corporate and not-for-profit corporate statutes.
In addition to the terms within the declaration of condominium, the association operates under articles of incorporation or a charter that contains certain basic information such as the association’s corporate name, dates of incorporation, primary purposes, voting requirements and protocols, registered agent information, board of directors’ information, membership requirements, and names and signatures of the incorporators. In addition to the articles of incorporation, another essential document of the condominium association is the bylaws that, in effect, constitute a code of internal administration and laws governing the operation of the corporation. Bylaws are an exhibit to the declaration of condominium and are recorded in the public records of the county where the condominium is located. Fla. Stat. §718.104(4)(l). The fact that essential documents of condominiums are recorded is important because of the public notice effect that these legal documents have on all future owners of the condominium units.
The power and authority of a condominium association to act is a matter of statutory grant combined with additional grants of authority under the declaration of condominium, articles, and bylaws of the condominium association (the “condominium documents”). The association is granted the capacity to sue and be sued; to be able to grant, convey, or receive both real and personal property; to have the authority to indemnify its officers and directors under certain circumstances; to make contracts for, acquire, and invest in other corporations, as well as to hold property; to borrow money and hypothecate its assets; and, generally, to do such other things as may be permitted by law or as otherwise provided in its governing articles and bylaws.
See Fla. Stat. § 718.111(2)-(14) and 718.114 detailing statutory powers granted to Florida condominium associations. In sum, the goal of the association is to uphold standardization within the condominium community and to provide a mechanism for the unit owners to combine their financial and intellectual resources for their mutual benefit. The association, pursuant to its governing documents and state statute, acts to preserve the nature and character of the condominium community. In fulfilling its goals, the association takes on various roles including that of a regulatory agency and a corporate entity. Through effective condominium administration, condominium association maintenance, covenant and rule enforcement and generation of funds, unit owners can be assured that the community's environment will be consistent with that which
they purchased and their association will be charged with maintaining those safeguards through purposeful activity.