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.  

 Them’s the Rules

 In both condominiums and homeowners associations, the association’s governing documents consist of a declaration (declaration of condominium or a  declaration of covenants, conditions and restrictions), bylaws, articles of  incorporation, and rules and regulations, according to Rita McGeary of the law  firm of Merrill & McGeary in Boston.  

 The declaration, for example, contains provisions like use restrictions, rights,  and collections information. Unit owners must vote to modify the declaration.  Rules and regulations generally relate to use restrictions. The bylaws are  typically amended by vote of the members, whereas the rules and regulations can  be amended by a majority vote of the directors. Where rules and regulations  conflict with the association’s declaration, bylaws or articles of incorporation, those documents will  prevail. While it is more difficult to make changes to the proprietary lease in  cooperatives than amending governing documents in condominiums, any changes  that occur should be explained and properly communicated to all members of the  association community, according to McGeary.  

 “In most cases, boards have the power to adopt and amend only rules and  regulations without owners’ consent,” McGeary says. “Usually the board is only required to record them to be valid, but good practice  is to send notices out to unit owners. Master deeds and bylaws can be amended only be vote of the unit owners and  shareholders, and some amendments might require consent of mortgagees.”  

 Other Documentation

 Ownership in a condo, HOA or a co-op requires other documentation as well. A new  buyer should receive a deed, (a proprietary lease, in the case of a co-op) and  a public offering statement (POS) or plan, which specifically details  information about the development.  

 A POS often includes information related to the physical aspects of the  building, including property surveys, landscaping details, recreation  facilities, appliances and amenities within units, façade, frames and common areas of the property. Deeds indicate, and are generally  required to transfer, ownership of real estate. A deed contains the names of  the old and new owners and a legal description of the property and is signed by  the person transferring the property. The different kinds of deeds, such as the  warranty deed, quit claim deed and grant deed, transfer different interests in  property.  

 According to Feldman, while Massachusetts statute, along with the rest of New  England, does not make offering plans mandatory like they are in states such as  New York, many of the larger condos and co-ops will provide assembled documents  and information in binders to new owners. “In Massachusetts, we don’t have [offering plans] for co-ops or condos. The only thing that is similar, as  a marketing tool when I represent a developer he has me do a short presentation  summarizing what the condominium is all about and that goes into the booklet  that includes and the condominium documents as well as the purchase of sale  agreement,” Feldman says.  

 Things to Consider Before Moving In

 Before you order the U-Haul, Perlstein suggests checking the multi-family  building’s rules and regulations to ensure it will be an appropriate fit for your  lifestyle needs. “People ought to look at what restrictions there are on the use and occupancy of  the units,” Perlstein says. “So, are dogs allowed? Are there age restrictions? There are a lot of the newer  detached home communities now are what we call ‘over 55 communities’ and occupancy is restricted to people where at least one of the residents is 55  years of age or older. Other things, for example, if you are a gardener, do the  documents allow you an area in which you can plant flowers or tomatoes?”  

 House rules aside, it is also imperative to peruse your building-to-be’s financial documents to get a clear idea of its financial stability. Perlstein  also urges potential buyers to check out a building’s physical stability as well.  

 “Certainly look at the finances of the community – in Connecticut, the resale certificate requires that the association deliver a  current budget, report on any contract that’s entered into for repairs, and report on the status of its reserves,” Perlstein explains. “If I were buying a unit in a condominium building, I would still hire a home  inspector even though the association is responsible for the structure. Ask the  inspector to look at the overall condition of the building, because, yes, the  association has got to replace the roof when it needs replacing, But I and my  neighbors are still going to have to pay for it. So if I’m moving into a community that'’s 25 or 30 years old and they have not yet replaced the roof, the windows or  driveway, there’s a big bill coming somewhere in the not-too-distant future,” he warns.  

 So when can a potential buyer get a hold of this paperwork to look over in order  to avoid potential buyer’s remorse? McGeary suggests requesting a copy of a building’s documents as soon as a buyer becomes interested in a property—way before the purchase process begins—or at least by the time he or she makes an offer.  

 According to Perlstein, some states such as Connecticut make accessibility to  governing documents easy thanks to statues that require their availability  early on in the purchase process. “In some states there’s a requirement for a resale certificate, which basically says that if I own a  unit and I contract to sell it to you, I have to get from the association a  complete set of the documents and some other disclosures and give them to you  and then you have seven or 10 days, or whatever the statute says, to review  them before you’re locked into the contract,” Perlstein says. “At least you and your lawyer have a head start. You know you got a complete set  of documents.”  

 Whether you live in a high-rise co-op building in Boston or a sprawling condo  development in Stamford, it pays to have at least a passing familiarity with  your community’s governing documents. Knowing what they contain can help save you time, answer  questions, and avoid hassles and misunderstandings.   

 W. B. King is a freelance writer and frequent contributor to New England  Condominium. Editorial Assistant Enjolie Esteve contributed to this article.