California’s builders, in an effort to combat the dual problem of an increasing population and a declining availability of prime land, are increasingly turning to common interest developments (CIDs) as a means to maximize land use and offer homebuyers convenient, affordable housing.
The two most common forms of common interest developments in California are Condominiums and Planned Developments, often referred to as PUDs. The essential characteristics shared by these two forms of ownership are:
Common ownership of private residential property; Mandatory membership of all owners in an association which controls use of the common property; Governing documents which establish the procedures for governing the association, the rules which the owners must follow in the use of their individual lots or units as well as the common properties; and A means by which owners are assessed to finance the operation of the association and maintenance of the common properties. Before continuing further, it may be helpful to clarify a common misconception about Condominiums and PUDs. The terms Condominium and PUD refer to types of interests in land, not to physical styles of dwellings. Therefore, when home buyers say that they are buying a townhouse, that is not the same as saying that they are buying a Condominium. When home buyers say that they are buying a unit in a PUD, they are not necessarily buying a single family detached home. Though the townhouse is the most common style of structure found in common interest developments in California, a townhouse might legally be a Condominium, a unit or lot in a Planned Development, or a single family detached residence. The terms Condominium or PUD will say a great deal about the ownership rights the buyer will receive in the unit and the interest they will acquire in the common properties or common areas of the development.
Common interest developments offer many advantages to home buyers low maintenance and access to attractive amenities-however, there are restrictions and duties which come with ownership of a Condominium or PUD that buyers should be aware of prior to purchase.
To acquaint you with various aspects of ownership in common interest developments, the California Land Title Association has answered some of the questions most commonly asked about Condominiums and PUDs.
Check your CC and R’s and association Bylaws (basically, rules governing the management of the development) to insure that you understand your rights to use of your unit and common areas.
What services will my homeowner’s assessments help to finance?
Your homeowner’s assessments support not only the easily recognizable building and swimming pool upkeep, landscape maintenance but also the unseen association management and legal fees and association insurance.
As well, reserves must be factored into your assessments, including reserves for replacement of such items as roadways and walkways. In the case of Condominiums, where ownership is usually limited to airspace within the walls, floors and ceiling of the unit, reserves will frequently fund replacement of such items as roofs and plumbing.
Each member of the homeowner’s association, upon purchasing their unit, must receive a proforma operating budget from the association. Basically, this will be a financial statement of the income and obligations of the association, which must include an estimate of the life of the obligations covered under the assessments and how their replacement is being funded.
What happens if I fail to pay my homeowner’s assessments?
Delinquency fees will be added onto the unpaid assessments. Should your delinquency continue, the association has the right to place a lien upon your property. The lien may lead to a foreclosure if the delinquency is not paid.
Of what importance are CC and R’s and Bylaws?
CC and R’s and Bylaws are the rules and regulations of the community, meant to guide the use of individual properties and common areas. Buyers should be aware that CC and R’s and Bylaws may be written so as to restrict not only property use, but also to restrict owners’ lifestyles, for instance, spelling out hours during which entertainment, such as parties, may be hosted.
CC and R’s and Bylaws are highly important and should be thoroughly examined and understood prior to purchase. They bind all owners and their successors to the rules and regulations of the community. Failure to follow those rules and regulations can be considered a breach of contract. Legal action may be taken against the homeowner for any such breach.