“Different Types of Florida Community Associations Explained” – News-Press
Q: What is the difference between a condominium association, a homeowners’ association, and a cooperative association? (G.W., via e-mail)
A: Good question. You often see references to “the HOA” in social media and elsewhere. These references are often intended to apply to all of mandatory membership housing entities, but legally they are quite different.
Condominium associations are governed by Chapter 718 of the Florida Statutes, known as the Florida Condominium Act. Although similar forms of ownership existed in Roman times, it is generally said that condominium ownership cannot exist (at least for title insurance purposes) without an enabling statute. The Florida appeals courts have specifically found that condominiums are a “creature of statute.” Florida’s condominium statute was first enacted in 1963, over sixty years ago, and was one of the first in the nation.
The hallmark of condominium ownership is the existence of two types of property, the “unit” and the “common elements.” The unit is as described in the declaration of condominium and is often a “box of air in the sky” and the improvements located in that box. The rest of the property is “common elements” (for example, the roof of the building), which all of the owners own as “tenants in common” in “undivided shares.” Contrary to popular belief, the association does not own the common elements, and most associations own no separate property in their own name.
Condominium development is highly regulated in Florida both regarding initial development and ongoing operation, through a state agency known as the Division of Florida Condominiums, Timeshares, and Mobile Homes. For example, the Division must approve developer pre-sale disclosures, and may fine owner-controlled associations for various violations of the statute. The Florida Condominium Act is lengthy and rather complex.
Cooperatives are described in Chapter 719 of the Florida Statutes, known as the Florida Cooperative Act, as a form of real property ownership where legal title is vested in a corporation or other entity, and beneficial use is proven by an ownership interest in the association and a lease or other document granting possession. Unlike condominiums, where the association often owns no property, a cooperative association owns all of the property, including the units and the common areas. The unit owners own shares in the association, and usually have some kind of lease agreement, which gives them exclusive use of their units.
While some high rises were developed as cooperatives in the 1960’s and early 70’s, they are fairly rare. The most common form of cooperative I see are mobile home parks that were converted from rental parks to “resident-owned communities” where the “park buyout” is structured as a cooperative to avoid the expense of surveying each lot to create a “unit.” With some notable differences, the provisions of the Cooperative Act are generally identical to those of the Condominium Act.
Homeowners’ associations have been called a “creature of contract” and do not require an enabling statute to exist. In fact, many such associations existed prior to the first statute regulating “HOA’s”, which was enacted in 1989. Homeowners’ associations are governed by Chapter 720 of the Florida Statutes, known as the Florida Homeowners’ Association Act.
The basic defining characteristics of being a “homeowners’ association” is that “parcel owners” are mandatory members of a Florida corporation responsible for the operation of a “community” and the association is authorized to impose assessments that, if unpaid, may become a lien on the parcel. Under this kind of legal structure, the parcel owner holds title to their “parcel,” usually a lot with a home on it, and the association holds title to the “common areas,” which may include streets and recreational amenities.
It is fair to say that homeowners’ associations are generally “unregulated,” meaning that there is no state agency which has the authority to review developer sales practices nor enforce the operational aspects of the statute against owner-controlled associations. While the Division has very limited jurisdiction over homeowners’ associations (related to board member education and certain election matters), most disputes in the HOA context must be resolved in the courts, often after efforts at resolution for a statutorily mandated mediation process.
Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. Send questions to Joe Adams by e-mail to jadams@beckerlawyers.com. Past editions may be viewed at floridacondohoalawblog.com.
