“Distinguishing Communities” – Attorney David Savitt reflects on the four types of communities you can live in – Condominium, Common Interest, Cooperatives, and Master Associations. (10 mins.)
The KSN Podcast examines various aspects of association law, landlord/tenant issues, property tax appeals, and more. In each episode, KSN attorneys share their experience and knowledge as they discuss legal updates, best practices, industry trends, and more. KSN Podcast episodes are available at www.ksnlaw.com/podcast.
Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We represent thousands of clients and community associations throughout the US with offices in several states including Florida, Illinois, Indiana, and Wisconsin.
For more info about our law firm and legal services, please visit www.ksnlaw.com
Subscribe to the KSN Podcast where podcasts are found including:
Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We have multiple office locations, serving hundreds of clients and thousands of communities throughout Illinois, Indiana, and Wisconsin.
For more info about our law firm and legal services, please visit www.ksnlaw.com.
Episode Transcription
Bernie: You’re listening to the KSN podcast and today we’re talking about distinguishing community associations. Welcome to the KSN podcast, where you’ll hear from KSN attorneys as they share their experience and insight on legal issues surrounding community associations, collections, property tax appeals, and landlord tenant law. I’m Bernie and today we’re joined by KSN attorney David Savitt. David practices condominium, townhome and homeowner association law. David, welcome to the podcast.
David: Hi, Bernie. Great to be here.
Bernie: All right. So our topic today is distinguishing communities. Whether you’re an experienced homeowner or a first time home buyer in a community administered by an association, it’s important that you understand the different types of associations you could potentially be living in and according to the community associations Institute or CAI’s 2018 national and state statistical review, there are just shy of 350,000 community associations. And that includes homeowner associations, condos, and housing cooperatives in the US. And those communities have over 73 million residents or about 25% of the US population. So while one out of every four Americans may be living in community associations, all communities are not the same, they have distinct issues and needs and on a very high level, we’re going to address some of those distinctions today.
David: Definitely, Bernie. It’s almost inevitable that a condominium townhome or homeowner will have to deal with some type of governing body as part of their association. So it’s vital that residents know their rights.
Bernie: All right. So what would you say David are some of the most common types of communities that people live in nowadays?
David: Well, the main communities are condominium associations, common interest community associations, master associations and cooperatives.
Bernie: All right. So let’s start with condominium associations. Describe that for us.
David: Well, typically when one thinks of a condominium association, the image of a high rise, residential building comes to mind. However, neither the physical style of the building nor the name provided to the association by the developer actually transforms something into a condominium association. Rather it’s actually what the language is in the declaration that makes a condominium a condominium. A condominium is a type of housing, usually attached where the owner owns their unit and a portion of the private land that it sits on. They also own a share in the amenities like swimming pool and the clubhouse on the property. All condominium buildings have associations or board of directors that govern the policies of the condominium project, allocate expenses for maintenance and collect the monthly quarter or annual association fees that each owner pays for building, insurance and community maintenance. All owners of the condominiums are members of the association.
Bernie: So, earlier you mentioned a declaration, so do condominium associations run off certain types of rules?
David: In short, yes. Everyone who buys a condo receives a set of the covenants, conditions and restrictions, which are also known as the CC&Rs. These documents are presented at closing and disclose what the rules and regulations of the association are. So for instance, whether or not you can have pets or lease your unit.
Bernie: All right, David and what kind of input can you provide when it comes to cooperative housing or co-ops?
David: Well, cooperative housing is very different from the rest of the associations that I mentioned earlier. In cooperative housing a corporation or a trust rather than individual owners or an association holds title to the entire property. The corporation or trust as the legal owner of the property provides each occupant with a long term lease that permits him or her to occupy their unit.
Bernie: So for example, in a condominium association, you have residents who run to be on the board and they’re voted to be a treasurer, secretary, and vice president. In cooperative housing and a co-op who gets to say who’s on the board.
David: Well, each resident receives a share of the corporation and controls it through an elected board of directors, similar to a condo. Every resident has the opportunity to vote for their board. Cooperative housing can be beneficial as it allows for sharing of certain expenses, such as interior maintenance or lawn maintenance, for example.
Bernie: So if your association is run by a corporation, what role does the resident– what role would I play in how the community– how my community is managed?
David: Well, in order to understand the respective rights and obligations of a tenant shareholder and the cooperative, one can look to the certificate of incorporation, the articles of incorporation, bylaws and your individual lease agreement. Those rights should be spelled out in those documents.
Bernie: David and I are going to take a quick break. When we get back, we’ll dive into master associations and common interest community associations.
Nikki: Hi everyone, I’m Nikki and I’m very excited to talk to you about our new board member boot camp called Brady Board. On March 21st at the Isle Theater in Chicago, we will discuss the basics, finances, operations, and hot topic issues in running a community association. This is an event you will not want to miss. During this four hour bootcamp you’ll receive the tools needed to run a successful board from KSN industry leading attorneys. For example, KSN attorneys will review how to conduct an effective board meeting, financial concerns, such as assessments, budgeting, and reserves. They’ll discuss hot topic issues such as recreational cannabis use in associations. Participants will even earn a certificate for their attendance. Visit www.ksnlaw.com/events for details on how to register. Make sure to register now as seats are limited. Again, visit www.ksnlaw.com/events to sign up now so we can see you there.
Bernie: And we’re back and I’m here with attorney David Savitt and we’re talking about distinguishing communities. David, we left off at master associations. What exactly is a master association?
David: In a master association, one or more sub condominium associations delegate by the terms of their declaration or other recorded covenants, certain powers that would otherwise be exercisable by the sub condominium association, such as for example, the responsibility to maintain certain common elements.
Bernie: So, when I hear of master association, it makes me think of big brother. Am I on the right path to understanding that? Is that what it sounds like?
David: So while it’s not exactly big brother, you can think of the master association as the umbrella that takes care of the common elements. A master association is created when there are hundreds of homes in a particular area. Think of those neighborhoods you used to trick or treat in as a kid because they were so large, you would never run out of houses. That is exactly the type of property a master association would be used for. A master association is often referenced as the umbrella group and the smaller sub associations come together as individual satellites to govern more manageable groups of homes. The master association is responsible for maintaining the common facilities, such as the roads, landscaping, lighting, and any other common areas that all the satellite groups have access to.
Bernie: So does the master association run off the same budget as the satellites?
David: So, that’s a good question, but the answer is no. A master association runs on a different budget and charges a separate fee for its services.
Bernie: All right. So we’ve discussed condominiums, cooperatives and master associations and now we have to talk about common interest community associations. Could you please explain that distinction for the listeners, David?
David: Sure. So a common interest community association consists of real estate that is subject to a declaration of covenants other than a condominium association, master association, or cooperative. So practically speaking, in other words, a common interest community association is really a catchall term for those communities that cannot be properly categorized as any of the associations we mentioned earlier.
Bernie: So what kind of requirements does this type of association fall under?
David: Well, different states have different requirements. In Illinois, any common interest community association that has over 10 units or annual budgeted assessments of over $100,000 would be required to abide by the Illinois common interest community association act. However, even if your common interest community association does not meet these requirements, it may elect in its governing documents to subject itself voluntarily to the common interest community association act. In the event that it does not make such an election, then the provisions of the Association’s declaration bylaws and the Illinois not for profit act would govern.
Bernie: So we’ve gone over condominiums, cooperatives, master associations and common interest community associations. So David, in summary, how would I go about knowing the type of community association that I live in?
David: Well, the first step you’d want to do is look at your Association’s declaration and to determine whether or not it mentions the Illinois condominium property act. From there, you can figure out whether or not you’re part of the catchall category for common interest community associations, whether or not you’re subject to a master association or whether or not your association is a cooperative. In addition, you can also ask your board of directors for guidance on this issue.
Bernie: That was KSN attorney David Savitt. He practices condo, homeowner and townhome association law. KSN is an experienced legal resource, ready to provide you with quality advice and exceptional service. We look forward to demonstrating how we’ve earned the trust of thousands of clients over the past 35 years. If you’d like to reach David or any of KSN experience attorneys, please call 855-537-0500. You can always visit ksnlaw.com and complete the contact form to send us a message. Thank you for listening.
Bernie: The music for this show was brought to you by free podcastthemes.com. Please note the material contained on the KSN podcast is for informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receive of the information contained on the KSN podcast. You should not act on the information discussed on the KSN podcast without first obtaining legal advice from an attorney duly licensed to practice law in your state. While KSN has made every effort to include up to date information on the KSN podcast, the law can change quickly. Accordingly, please understand that information discussed on the podcast may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete or up to date. KSN reserves the right to revise or update the information and statements of law discussed on the podcast at any time without notice and disclaims any liability for your use of information or statements of law discussed on the podcast or the performance of the podcast generally. The KSN podcast may be considered advertising in some jurisdictions under applicable laws and ethical rules or regulations.
Please note the material contained on the KSN Podcast is for informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained on the KSN Podcast. You should not act on the information discussed on the KSN Podcast without first obtaining legal advice from an attorney duly licensed to practice law in your State. While KSN has made every effort to include up-to-date information on The KSN podcast, the law can change quickly. Accordingly, please understand that information discussed on the podcast may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed on the podcast at any time, without notice, and disclaims any liability for your use of information or statements of law discussed on the podcast, or the performance of the podcast generally. The KSN Podcast may be considered advertising in some jurisdictions under applicable law/s and/or ethical rules/regulations. © 2020 Kovitz Shifrin Nesbit, A Professional Corporation.