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Condominium Associations

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Community associations are an important part of New Jersey’s housing environment. There are three main types of community associations in New Jersey: condominium associations, cooperative boards (“co-ops”), and homeowners associations. Condominium associations are the most common.

When a person buys a condominium, they are buying title to the property unit, such as an apartment or townhouse. However, title to the “common elements,” such as the land, the building exterior, recreational facilities, and parking lots or spaces, are held by the buyer together with all the other owners in common throughout the condominium association. When an new owner buys a unit, she automatically becomes a member of the condominium association, which exists to maintain the common elements. This membership is typically not optional.

The association is responsible for the administration and management of the condominium property, meaning the areas and activities of common interest to the unit owners. The operations of the condominium association are run by its board of trustees, made up of owners who are elected by the association membership. The association must maintain accounting records in accordance with generally accepting accounting principles and must be made available for inspection by unit owners at reasonable times. When a condominium association is first created, owner-control of the board is phased in during development of the property, and the owners take after 75 percent of the units are sold.

The rights and obligations of owners and the operations of the condominium association are governed by New Jersey law and the association’s master deed and bylaws. Every owner should obtain and keep a copy of these documents. These documents are required to contain an identification of the association, the legal description of the land, a survey of the property detailing and identifying common elements and illustrating and identifying each unit, a description of what the common elements are, the interests in the common elements for each unit, the voting rights of unit owners, by-laws, the proportions or percentages and manner of sharing common expenses and owning common surplus. Condominium associations are regulated by the Condominium Act.

Units are assessed separately for real estate taxes based on the value of the unit, plus the unit’s share of the common elements. Unit owners typically must pay monthly maintenance fees to the condominium association to be used for the maintenance of common elements.

Purchasing a condominium unit can be more complex than purchasing a regular house and therefore there are important issues to consider during the purchase of the property. For instance, some condominium associations are not FHA approved. When a buyer is attempting to obtain an FHA mortgage, the entire condominium needs to be FHA approved – there is no “spot approval” for individual units. This can cause significant delays or even make it impossible for the purchaser to buy the property through an FHA loan. Also, parking may be an important factor to consider. The unit may provide one parking space, or just open use to a parking lot shared by multiple residents. Further, additional or guest parking may be a distance from the actual unit. Also, it is important to be clear about exactly what areas are common elements and what areas are not, and which areas are covered by the association’s insurance and which would be covered by the owner’s insurance.

McLaughlin & Nardi’s attorneys are experienced with representing sellers and buyers in purchasing or selling condominium units. To contact McLaughlin & Nardi to learn more about what we can do to help, please visit our website, or contact one of our New Jersey lawyers by e-mail or telephone at (973) 890-0004.