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| Avoiding the pitfalls of condominium ownership in Marco Island, FL
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Disputes that divide owners and the communities in which they live are often contentious and emotional. However, such disputes are sometimes avoidable. The following are some strategies for avoiding the pitfalls of condominium ownership:
— Know the rules. Condominiums and the associations that operate them are creatures of statute. To the extent constitutional, the recorded condominium documents, in particular the declaration of condominium, may lawfully restrict the manner in which owners use and occupy their units. For example, a condominium association would not be able to enforce a restriction contained in the declaration of condominium banning occupancy of units by handicapped individuals or minorities, but could probably enforce a restriction which banned pets in units, regulated leasing of units, required approval by the board for unit sales or, in some cases, restricted occupancy by children.
One very disruptive annual meeting occurred when owners split over the board's authority to enforce a restriction contained in the declaration of condominium prohibiting owners from parking trucks on the property. One woman stood up and shouted, "That restriction is not in my deed!" Actually, she was wrong. A condominium unit's legal description as contained on a deed to the property is, in fact, a reference to that condominium's declaration of condominium, including where that document is recorded in the public records of the county in which the condominium is located. Owners who are unaware of the contents of this declaration and other condominium documents, including association rules, may unwittingly find themselves subject to restrictions which are inconsistent with the manner in which they wish to use or occupy their units.
How can owners protect themselves? Immediately following execution of a contract for the purchase of a condominium unit (and preferably before), the buyer should obtain a complete set of the condominium documents and all other documents required by law to be supplied by a seller to a purchaser. Florida law gives a buyer of a condominium unit a period of time following the execution of a purchase contract to review these documents. During this time, the buyer may cancel the contract without penalty. (Note: different time periods apply depending on whether the transaction is an original sale from a developer or a resale.)
At the time buyers first begin to be interested in the purchase of a condominium unit, they should make a list of must haves. Obviously, amenities, location, features, size and other physical factors are critical in reaching the decision of where to buy. The manner in which the buyer can use and occupy the unit is just as important. For instance, if Spot is a member of the family that cannot be left behind, even seasonally, do not purchase a unit in a condominium that does not allow pets. If the buyers wish to lease their units until they are ready to retire, and they purchase in a community that strictly limits or prohibits leasing, they will have made a grievous financial error.
After completing the list of must haves, buyers should provide that list and the documents received to the attorney representing them in the closing. They can also request the attorney review and give advice regarding the procedures necessary to amend the existing documents. Using the above example of a person who buys the unit as an investment to lease, if a small number of owners, acting alone, may amend a provision to restrict or eliminate that right, this may be cause to reconsider the purchase. Many attorneys, upon request, will provide this review in the fee charged to handle the closing.
— Know the neighbors. As important as knowing what the condominium documents restrict is what they allow. For instance, if a buyer has a particular sensitivity to dog barking or harbors a fear of pets, perhaps a community that permits them is not a good match. Those who do not wish to live in a community consisting of families with children, may choose a condominium which has qualified under federal and state law as a "community for older persons." Buyers who do not intend to lease their units, but buy a condominium unit with liberal leasing rules could end up living with a predominance of renters. While renters are obviously not bad people per se, they do not have a financial investment in the property, and too many renters could also limit the buyer's right to mortgage the unit or affect the ability to resell it.
While it may not be possible to do in the case of a pre-construction contract with a developer, tour the condominium and its common areas thoroughly before signing the contract. Talk to the people who will be neighbors. Meet the manager, if there is one. If the association requires a personal interview as a condition of its approval of the sale, approach it openly rather than as an imposition. Buyers should attend in person, and married buyers should bring their spouses, even if the board does not require it. Buyers can utilize the interview as an opportunity to ask questions concerning the community.
— Be honest. Prospective buyers should contemplate where they have lived prior to condominium ownership and whether they are suited to living in a condominium. In condominiums, especially high-rises, persons live in close physical proximity to one another. Unlike owners of single-family homes, condominium owners do not usually have the right to control the method or timing of exterior maintenance and generally cannot modify property they share in common with others. Even planting flowers without permission of the board of directors is probably prohibited. Buyers may find themselves living literally steps away from someone they cannot stand in a community where they are restricted to the type and number of vehicles they may park, the number of guests they may have, and even the types of floor coverings they may utilize.
Hundreds of thousands of people have found condominium living pleasant, carefree and satisfying, but unless buyers are honest with themselves about those factors that differentiate condominium living from single family living, they may find themselves soon selling the unit or violating rules that they legally obligated themselves to obey when they purchased it.
— Be money-wise. Understand personal finances and that of the association. Under most circumstances a buyer should not purchase a condominium unit solely as an investment. The condominium market in Florida has had many ups and downs over the last 30 years. The purchase should be made because all factors, including the price, are right. Buyers should prepare for the possibility that the value of the unit will not appreciate and, in fact, may depreciate. Buyers should be able to comfortably make the mortgage payment and pay the regular and special association assessments. Realize that the association, like the mortgage holder, can foreclose on the unit if assessments are not paid.
The liability for special assessments is especially important when purchasing a unit in a condominium where the owners have decided not to fund (or to only partially fund) reserves for capital expenditures and deferred maintenance for the various components of the building and improvements, such as roof replacement and building painting.
The issue of reserve funding is often hotly contested. Some owners prefer to pay to the association their share of the costs of the large expenditures over time as part of their regular periodic assessments. Others prefer to retain control of their money and its investment until needed. Points on both sides are valid. However, those who purchase in a community with no reserves should have the necessary investments from which to pay the special assessments when due. These special assessments are often very large and can come with little warning or time in which to pay. Also, as is the case with too many rentals, buying a unit in a community without reserves can limit the ability to mortgage the unit and reduce the value of the unit upon resale.
Every condominium unit buyer in Florida is entitled to receive a copy of the association's most recent year-end financials. An astute buyer will know the association's financial condition before closing.
— Get involved or do not complain. Nothing can be more divisive to a condominium community than the owner who holds every action of the board of directors (who are almost always volunteers and fellow owners) to strict scrutiny, reports the association to regulatory agencies for non-material or non-existent violations or launches a mail campaign to other owners which includes complaints about the lack of proper maintenance of the property or alleged fraud or misconduct by directors or the manager. Generally, however, the one thing that type of person will never do under any circumstances is serve on the board or a committee of the board. He or she would prefer to be part of the problem (or the entire problem), rather than part of the solution.
After closing, the obligations of unit owners to educate themselves have not ended but have only just begun. Buying a unit is both a financial and emotional investment. In a condominium where the board actively communicates with the owners, carefully read the newsletters or other communications from the board. Those with questions or concerns should call the manager or politely write to the board, including their names and unit numbers. Most importantly, when notices of meetings and voting proposals are received, attend the meetings in person or vote by proxy. These are decisions which affect owners and their investment. Those who take an apathetic or antagonistic approach and expect others to take full responsibility to make the decisions involving the maintenance and operation of the condominium and the use and occupancy of individual units, should not be heard later complaining about those decisions. A community that is overtaken by apathy, sharp division, a simple lack of civility, or a combination of all three, can be hamstrung in its ability to operate at all.
Most condominium associations in Florida are organized as corporations not-for-profit which are run by board of directors usually elected from the owners. As a new owner, consider running for the board. This will be great hands-on education about the community and how it runs. Owners can also volunteer to serve on or chair a committee. Often, the strength of an association is in its committee members who bring their expertise in the business world to benefit their community. It is rare that boards decline sincere offers of volunteer assistance. Most long serving directors say they continue to serve because no one else will.
At the least, stay involved by voting and by attending board meetings and social events whenever possible. Make the community a kinder group by getting to know fellow residents. As with life in general, it is easier to be nasty to a stranger than to a friend.
Some disputes among people are unavoidable because of the nature of people. However, education, realistic expectations, responsibility, and yes, kindness, can help people avoid becoming a party to a dispute involving their condominium. This will leave condo dwellers free to enjoy what brought them to Florida in the first place.
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