While essential to the successful operation of all cooperatives or condominiums, governing documents are often only glossed over by otherwise well-intentioned board members, residents and property managers leading to potential pitfalls. As a result, it is often suggested by counsel that boards revisit, and in some cases relearn, the various components of these all-important and varied documents.
Matthew Perlstein of Perlstein, Sandler & McCracken LLC, a condominium and homeowner association law firm in Farmington, Connecticut, said that condo owners often are in the dark about the responsibilities of community living and never even bother to read the documents they are given when they move in.
“I think it’s a fair statement to say that the majority of people who buy a unit in a condo, or a co-op, or a planned community, usually do not have a full understanding of all of their rights, their duties or the limitations on their rights that are set up by the statutes and by the documents,” Perlstein contends. “Most homeowners have not read the documents. So people come with the expectations that they bring from their prior lives and until somebody explains it to them, they’re sometimes surprised. You say, ‘Well, I own this. So I can do whatever I want.’”
The first step is differentiating between cooperatives and condominiums. Co-ops are typically governed by a proprietary lease, a certificate of incorporation and a set of bylaws. A condominium is traditionally governed by a master deed and bylaws along with a declaration of condominium or a declaration of covenants, conditions and restrictions (CC&R’s). The declaration is usually recorded with the recorder of deeds in your town and county, while the bylaws, which govern the operation of the board, will typically stay within the building.
The fundamental difference between co-op and condo ownership is what buyers are actually purchasing, and this difference is reflected in the building’s documents, Saul Feldman of Boston-based law firm of Feldman & Feldman, P.C., says. “The documents for a condo in Massachusetts are a master deed, which is a declaration for a condominium and a condominium trust. For a cooperative it’s articles of incorporation and bylaws. It’s shares in the cooperation, which the residents get, and they get a proprietary lease. In a co-op [buyers] are both a shareholder and a tenant under the proprietary lease which gives them the rights to occupy their unit. In a condominium they actually get a deed, they actually own their space,” Feldman says.