Condomania and HOA's

It's hard to believe that condominiums were only authorized to be created by an act of the legislature less than 50 years ago.

The first Condominium Act, Chapter 711, Florida Statutes, was a simple law. It was what is known as an "enabling act" meaning all it really provided for was how to create a condominium.

Before that real property, capable of being mortgaged for 30 years with title insurance could not be "floating" above another piece of real property (some states call thier laws "Horizontal Property Acts").

While Cooperatives had a somewhat similar setup they consisted of a corporation formed to buy a building, and then the shareholders would have a lease which gave them exclusive occupancy of an apartment. That was personal property, not real property and as a result financing was typically not available like a piece of real property, that includes a note and mortgage.

Since then, the concept has gone through many phases, and the law has changed dramatically. Many early condos were sold with the developer retaining fee title to the property and selling 88 year leasehold interests; an affiliate of the developer would be set up to enter into a 99 year recreation lease of the property outside the apron on the building and a 99 year management contract, based on how much was spent would be set up as well.

Theoretically that made the properties more affordable and the developer ensured a stream of income for life and that of several generations. That ran into opposition because the leases were tied into the CPI when it more accurately reflected the cost of living, and so when we had years with 15 percent inflation and more those payments rose much faster than the ability of the owners to pay them, so legislative relief was sought. That was, for the most part ineffective as laws cannot retroactively interfere with contract rights. However the practice fell out of favor with consumers due to the horror stories that were publicized.

Recent years have seen an explosion in the number of condominiums, estimated to be well over a million. Regulation of those condominium associations has risen as well, with many laws put into place so as to provide more "protection" to the owners, but possibly resulting in the law of Unintended Consequences, with fewer and fewer people willing to serve as volunteer directors, even with professional licensed management.

Even Joan Rivers is totally serious as a volunteer director on her condo board...

I hope to use this as a start to the process of examining everyday issues that arise in condo operations and Homeowner Association (HOA) communities as well. A little bit of history is always helpful as knowing where one is depends on where one came from and how to move forward.

Mr. Tankel can be reached through his website, www.condocollections.com, or by email at info@condocollections.com.