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HOA and COA

Started by CathrynD • 7 replies • 361 views

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CathrynD (Florida)
Posts: 1
Posted:
Can you tell me the difference from these two associations? Because we are a COA we can not charge a transfer fee to a new buyer in Fl. Can we change our Rules and Regulations or change to an HOA? thanks,Katie
ElleN (Idaho)
Posts: 4,420
Posted:
I take it you would like your COA to be able to charge new owners a meaningful capital contribution fee. I see in Florida that FS 718 would not allow this, even via an amendment to the Declaration or a rule change. More at https://www.campbellpropertymanagement.com/blog/2018/12/19/can-condominiums-charge-capital-contribution-fees.

FS 720 does permit capital contribution fees, with caveats as always. However, I do not think amendment of the Declaration so as to be under FS 720 and not FS 718 can be done. This is because FS 720 defines an "association" as consisting of "parcel owners." Then FS 720 says that " “Parcel” means a platted or unplatted lot, tract, unit, or other subdivision of real property within a community, as described in the declaration:
(a) Which is capable of separate conveyance; and
(b) Of which the parcel owner, or an association in which the parcel owner must be a member, is obligated: ..."

I do not see how a condominium community would have owners who qualify as parcel owners.

I think your COA is stuck with being under FS 718.

What's wrong with special assessing all owners to raise the amount in the reserve account? I do not see any major impediments to this in Florida.

LoriM15 (Florida)
Posts: 1,009
Posted:
Hi Katie - I dont' see any way you could change your documents from being governed under FS 718 if they already define your units as condos and the association owns the common elements.

FS 718 defines a condo as: “Condominium” means that form of ownership of real property created pursuant to this chapter, which is comprised entirely of units that may be owned by one or more persons, and in which there is, appurtenant to each unit, an undivided share in common elements.

If that defines your association, then you are stuck with FS 718. So your only way to raise money is to increase dues (no limits in Florida on how much you can raise it yearly unless your documents have a restriction) or do a special assessment. Remember that condo insurance is required to have an assessments coverage that will pay for a special assessment for damages caused by an event like a hurricane. Our condo sub-associations are including a lot of things in their special assessment that had Hurricane Ian as a contributing factor because they know it will be paid by individual condo owner's insurance.

MaxB4
Posts: 3,513
Posted:
What is a transfer fee, as I charge a transfer fee to close out one owner's account and open a new one for the new buyer? It does not involve any capital contribution to the reserves or association.
ElleN (Idaho)
Posts: 4,420
Posted:
From what I am seeing for Florida condos, Florida law lumps buyer-seller required "capital contribution fees" into the category of "transfer fees."
CathyA3 (Ohio)
Posts: 6,299
Posted:
The way I heard it explained is that ownership is defined differently in an HOA than in a COA.

In an HOA, the common areas (streets, landscaping, amenities, etc.) are owned by the HOA itself, which is a corporation, and owners are members of this corporation.

In contrast, in a COA individual unit owners own an undivided interest in the common areas which, in addition to the items listed above, often includes portions of the structures of the residential buildings. Because of this undivided interest, typical condo owners literally own a fractional share of the land underneath everyone else's units as well the roofs over their heads - and everyone else owns a fractional share of the land and roof underneath and above our typical owner.

Because of this, it's not possible to redefine a COA as an HOA.
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By CathyA3 on 01/31/2023 1:26 PM

In contrast, in a COA individual unit owners own an undivided interest in the common areas which, in addition to the items listed above, often includes portions of the structures of the residential buildings. Because of this undivided interest, typical condo owners literally own a fractional share of the land underneath everyone else's units as well the roofs over their heads - and everyone else owns a fractional share of the land and roof underneath and above our typical owner.
As I believe Lori pointed out, FS 718 (the Florida condo statute) says what you say. To quote the latter:

" “Association” means, in addition to any entity responsible for the operation of common elements owned in undivided shares by unit owners, any entity which operates or maintains other real property in which unit owners have use rights, where membership in the entity is composed exclusively of unit owners or their elected or appointed representatives and is a required condition of unit ownership."
CathyA3 (Ohio)
Posts: 6,299
Posted:
Quote:
Posted By ElleN on 01/31/2023 1:44 PM
Posted By CathyA3 on 01/31/2023 1:26 PM

In contrast, in a COA individual unit owners own an undivided interest in the common areas which, in addition to the items listed above, often includes portions of the structures of the residential buildings. Because of this undivided interest, typical condo owners literally own a fractional share of the land underneath everyone else's units as well the roofs over their heads - and everyone else owns a fractional share of the land and roof underneath and above our typical owner.
As I believe Lori pointed out, FS 718 (the Florida condo statute) says what you say. To quote the latter:

" “Association” means, in addition to any entity responsible for the operation of common elements owned in undivided shares by unit owners, any entity which operates or maintains other real property in which unit owners have use rights, where membership in the entity is composed exclusively of unit owners or their elected or appointed representatives and is a required condition of unit ownership."

Yes, I know - I saw that.

I provided the plain English version about why HOAs in general are different from COAs, rather than the legalese specific to Florida.

Other people besides the OPs read these discussions, and I try to keep them in mind. It can help them to understand when things may be different in other states and when they're the same, and stop them from drawing incorrect conclusions.

Of course anyone is free to ignore anything they don't find helpful.

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