Business Law 101 / CONDOMINIUMS

By Albert L. Kelley

A common method for owning property today is through a condominium organization. Most of us think of condominiums as glorified apartment buildings, where the person buys an apartment and has an undivided interest in the common area. Condominiums apply to business property as well. Like with a residential condominium, business condominiums allow businesses to purchase office space in a building, and to receive an undivided interest in the common areas. In most situations, the unit owner only purchases the space within the walls of their office. While they can make modifications to the walls (such as painting and hanging photographs), often major changes such as knocking holes in the walls are prohibited.

With the purchase of the unit, there is also ownership of common areas. Common areas (sometimes referred to as common elements) include all of the condominium property except the actual units. This includes the hallways, walkways, driveways and stairways, parking lot, elevators, exits, yard, plants, roof and exterior walls. The common areas also include easements for the passage of plumbing, wires, ducts and conduit. Maintenance of the interior of the condominium unit belongs to the unit owner; maintenance of the common areas belongs to the condominium association.

To form a condominium, all the owners of the various units (usually the developer before the units are sold) must file a Declaration of Condominium with the County Clerk’s Office. The operation of the Condominium is handled by a Condominium Association. The Association is a corporation, either for profit or not-for-profit and must be run like a corporation. The unit owners are the shareholders or members of the corporation. It must have by-laws and officers; it must hold annual meetings and must prepare financial records and must keep its records available for the members to see at reasonable business hours. There must be an annual budget, setting out the anticipated expenses for the Condominium. As with any other corporation, the officers and directors have a fiduciary duty to the unit owners and can be held personally liable in certain circumstances for failure to follow the condominium laws (as an example, an officer who fails to allow members to inspect corporate records may be held personally liable for all attorney fees and costs incurred to enforce inspection).

The Association is responsible for things such as painting the exterior of the buildings, landscaping, and repaving. While the unit owners are responsible for repairs that pertain to their unit only, the Association is responsible for repairs that affect the entire building. As an example, a broken toilet is a unit owner’s responsibility; a broken sewer line is the Associations. To pay for maintenance and repairs, the Association is authorized to charge a regular maintenance fee and when necessary, to make a special assessment against the units for larger expenses. If the owner fails to pay an assessment or maintenance fee, the Association may place a lien on the unit for the amount owing.

Before purchasing into a condominium, the buyer should request to inspect the Articles of Condominium, the Declaration of Condominium and the By-Laws. They should also review the current budget and if possible, the most recent minutes of the Association meetings so they know what issues are currently under consideration.

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is also the author of “Basics of Business Law” and “Basics of Florida’s Small Claims Court” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.

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