Don’t be mislead by the title. We strongly urge you to read all of these definitions. Reading our definitions will give you lots of useful information.
The definitions in this section are focused on Condos and Coops. General real estate terms are defined in our Greenwich Living web site.
A special payment called for by the board of directors of the Association to pay for a capital improvement or repair for which funds in the reserve account are inadequate.
A condition in the standard cooperative sales contract requiring the buyer to be approved by the board of directors before the sale is completed. In most instances, there are no written rules available to buyers about what will or won’t be satisfactory to the board. Usually, approval requires an interview and a financial statement from the buyer. Personal references may also be requested.
Board of Directors
The Board is elected by the members of the Home Owners Association. In addition to approving buyers of cooperative units, the Board is normally responsible for establishing a budget, setting up reserves, collecting common charges, making rules for the common good, as well as hiring and managing the management company.
Condominium association boards must provide a summary of the proposed budget to each unit owner and set a date for the owners to decide whether to ratify it.
Typically refers to either a housing Cooperative or a Condominium, however it can also refer to a planned community. New common interest communities that contain no more than 12 units do not need to a public offering statement. These communities have limited resale certificate requirements.
See our article Choosing a Condominium or Cooperative for a discussion of the distinctions between them.
Community Associations Institute (CAI)
CAI was formed to deal with problems with association management. It was an educational organization then, but as problems continued CAI made substantial changes in 1992 to its structure and became a business trade group primarily to lobby state legislatures. In 2005, CAI dropped its membership category for Home Owners’ Association (HOAs) since, presumably, HOAs were consumers, users of CAI services and don’t belong in a tax benefited group whose aim is to support the business interests of its members. CAI is responsible for the National Board of Certification for Community Association Managers. CAI Connecticut Chapter has a good list of articles as well as a Trade Show.
A monthly amount paid to the Home Owners Association to cover the Associations costs of operating the condominium, such as: normal maintenance and repair like if a fan coil unit condo required replacing, for example, snow removal, garbage pick-up, management fees, contributions to the reserve fund and amortization of any original community mortgage. Common charges may also include water and heat. These charges can vary significantly from Association to Association, especially if there are amenities such as docks, swimming pools, etc.
A condominium is a collection of individual home units along with the land upon which they sit. Individual home ownership within a condominium is construed as ownership of only the air space confining the boundaries of the home. The boundaries of that space are specified by a legal document known as a Declaration which is filed with the Town of Greenwich. This may differ in different parts of the country and states, such as with the new condos near dunn loring metro, North Virginia as one example area. Typically these boundaries will include the drywall surrounding a room, allowing the homeowner to make some interior modifications without impacting the common area. Anything outside this boundary is held in an undivided ownership interest by a corporation established at the time of the condominium’s creation. The corporation holds this common area property in trust on behalf of the homeowners as a group–-it does not have ownership itself.
The most common groupings of units are: a Multi-story building (often the best for one floor living), attached units and detached units, “Town House”.
A high-rise building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.
Declaration, Bylaws and Rules
The Declaration of Condominium describes the common interest, the property and floor plans and establishes the general restrictions on use. It must be filed in the Town’s land records. The Rules of Governance are usually covered under a separate set of Bylaws. Finally, there is a set of Rules and Regulations providing specific details of restrictions and conduct. They are established by the Board and are more readily amendable than the Declaration or Bylaws. Typical rules include mandatory maintenance fees (Common Charges), pet restrictions, ability to rent a unit, parking space(s), outdoor Bar-B-Q, installing wood floors and color/design choices visible from the exterior of the units.
Homeowners Association (HOA)
A homeowners association, consisting of all the owners, manages the condominium through a board of directors elected by the membership. The Association, depending on the number of units, may be self-managed or may hire a management company. Common charges and Assessments must be approved by the Association.
Unlike a single family home, both the association and the unit owner carry insurance. Usually the association carries insurance to protect the association (including unit owners) against problems with the physical plant and common areas, liability, employee misconduct and other related risks. The best rates are generally given to associations where rentals do not exceed 25% of the total number of units. A high number of rental units may also affect your ability to mortgage your unit. The Unit owner’s insurance company will want to know what coverage is maintained by the association so that the insurance risks can be balanced properly. You may want to contact Garrity Insurance or similar providers to start looking at insurance policies.
Interim closing can occur when you purchase a newly constructed condominium. In this event, the first closing, occurs on the confirmed possession date (also called the interim closing date) when the unit is ready for occupation. At this time, the purchaser is required to take possession of the unit, but the condominium has not yet been registered. After the interim closing, you can live in the condominium dwelling unit, but you do not yet own it: You occupy the unit more or less as a tenant. During this time, you will pay a monthly interim occupancy fee to the developer, for realty taxes, maintenance and interest on the vendor take-back mortgage. Once the condominium is registered there will be a final closing. At the final closing, title to the condominium is registered in the purchaser’s name and, if you are borrowing money to purchase the condominium, your mortgage is also registered.
Larger groups of units usually hire a management company to oversee the operation of the complex. Management companies are not all the same. Like everything else, some are more expensive than others. Some are better than others. Most management companies are members of the CT chapter of the Community Associations Institute. For a list go to CAICT.org.
The Management fee is the cost of professional services paid to the management company to oversee the affairs of the cooperative or condominium complex. The fee usually covers personnel and includes services such as bookkeeping, reporting, and records. However, the management company may also be paid to perform other services. When comparing management fees, you need to know what services are being performed.
Newly Constructed Condominium
A brand-new, modern building(s). Brand new condominiums are often covered by a New Home Warranty Program. If you purchase a new condominium, you may be allowed to customize your unit. If you purchase a unit from a plan, you should be aware that the plans may not reflect the actual floor area of the unit: The plan may not include the walls of the unit, where things such as the hot water heater, furnace and/or air conditioning unit could be situated or how low the ceiling will be to accommodate wires, pipes and ducts. This means you may need to visit web site if the air conditioning breaks down. A Conversion Condominium is similar to a newly constructed condominium, but the exterior of the building already exists. The developer modifies the building to create individual units and common elements. New Condominiums may require an interim closing. Resale Condominiums do not. Common interest communities that contain no more than 12 units do not need a public offering statement.
Plans for building new common elements, units or even entire new buildings on the same site. Phasing can affect your overall enjoyment of the property and/or result in delays in access to advertised amenities. It is important to be aware of other possible implications of phasing.
Resale Package (aka Condominium Documents)
A unit owner must provide the buyer with condominium documents. These documents must include the declaration, By-laws and Rules & Regulations of the condominium association and a resale certificate. Buyers have 5 business days after delivery (7 days after being sent by registered or certified mail) of this package from the seller to legally rescind the purchase offer (15 days for new complexes). The resale package must be furnished to the purchaser or her/her attorney. It is very important to review these documents carefully. If an assessment or an increase in common charges is being contemplated, it will be in the Association’s minutes which you should ask for if not included.
Note: In January of each year the Association must file with the town clerk the name and address of the officer or managing agent from whom the resale package may be requested.
CT law requires an owner to provide a purchaser with a resale certificate as part of the condominium documents. (There is an exception for communities that contain no more than 12 units and can not be further developed.) The association must provide a unit owner with a “Resale Certificate” within ten days of a written request.
The standard resale certificate should include:
- whether the association intends to exercise any right of first refusal and whether there are any other restrictions on the sale of the unit.
- common charges and any unpaid common charges or assessments currently due by the unit owner.
- any capital expenditures greater than $1,000 which have been approved for the current or next fiscal year.
- the reserve fund.
- current operating budget.
- any unsatisfied judgments against the association and any pending suits against the association.
- amount and type of insurance coverage provided by the association.
- for cooperatives, an accountants statement regarding the deductibility of real property taxes.
- any restrictions on the owner’s right to use or rent the unit.
- The association can charge a fee up to $75 for compilation and printing.
An existing condominium. If you purchase a resale condominium unit, you will buy it from an existing owner, not the developer.
It is prudent that an Association collect money in the common charges in excess of the operating expenses. The excess cash is accumulated in a reserved fund for capital improvements and contingencies. A large reserve fund is a hedge against having to ask for a special assessment. if you are buying into a new complex, there will not be much of a need for a large reserve as major items will not likely need to be replaced soon, however, there should be money coming from the general budget into the reserves to build up a reserve. In older complexes, the reserve should be larger.
The word “Townhouse” is used loosely for many things. Generally, a townhouse is a single unit that is detached or semi-attached to the other unit(s) in the condominium complex. The name “townhouse” is also used to describe non-uniform units that are designed to mimic detached or semi-detached homes.