A condominium is a type of real estate ownership having three parts, condominium units, the common elements and the limited common elements, described in the Declaration and shown on the plans. It is governed by the condominium association, a Maine nonprofit corporation.
1. The condominium unit is space that is individually owned and taxed. It typically consists of living space within a building. Except as specifically limited by the condominium declaration, unit owners are in control of what goes on within the unit.
2.The common elements (or common area) is owned collectively (“in common”) by all unit owners. It usually consists of the land and most of the actual structure of buildings. The condominium association’s board of directors, not individual unit owners, have general authority over the common elements.
3. The limited common elements are similar to the common elements with the exception that the owners of units to which they are attached have exclusive use over them. Examples include decks and patios, attic spaces, assigned parking spaces, doorstoops and utility lines providing service to only one unit. Limited common elements are usually identified in the Declaration or shown on the plans, or both..
Importantly, different rules apply to the three parts -units, common elements and limited common elements.
With many unit owners on a single parcel of land, complex rules about ownership, maintenance, insurance and governance are necessary. Unfortunately, these rules are not found in one place and they may be inconsistent with each other. Where they conflict, the conflict is usually resolved in favor of the rule source having priority, in the order shown below..
First, state law dictates some of the legal relationships. The Maine Condominium Act governs condominiums created after 1983. The Unit Ownership Act generally governs condominiums created before 1983, although some parts of the newer Maine Condominium Act also affect these older condominiums.
Second, each condominium in Maine has a Declaration, which defines the exact boundaries between units and common areas and sets out more legal relationships and details within the condominium. The plats, a survey of the property showing the location of buildings, and the plans, showing the dimensions of each unit, are part of the Declaration.The Declaration, and any amendments to the Declaration, must always be recorded in the county registry of deeds.
Third, the Bylaws set out the operational details of the Association, which is the governing body of the condominium. Every unit owner is automatically a member of the condominium association.
Fourth, there may be Rules which govern administrative and other details.
Other aspects of condominium operation are listed in the expandable sections below.
Responsibility for maintenance, repair and replacement of different parts of the condominium is not as simple as it seems:
First, these issues are frequently resolved depending on whether the item is part of the unit, part of the common elements or part of the limited common elements.
Second, the responsibility to determine the need for maintenance, repair and replacement and to do the work is frequently separated from the responsibility to pay for the work.
Third, these responsibilities are different where there the need to repair or replace because of damage or destruction, a "casualty loss", a sudden event such as fires, typically covered by insurance.
Fourth, sometimes the responsibility for "normal" maintenance, such as sweeping, cleaning or shoveling snow, is different than for other maintenance and repair.
Fifth, sometimes the responsibility depends on whether a particular unit benefits from the work.
Sixth, the responsibility to pay for the work may depend on whether the need for maintenance, repair or replacement was caused by misconduct or negligence on the part of a unit owner, their guests or occupants of their unit.
Subject to the factors above, the general rules are:
a. Unit owners are generally responsible for maintenance, repair and replacement of things that are defined as part of the unit. Depending on the boundaries of the unit defined in the Declaration, these items may include floors, rugs, wallboard around the exterior of the unit, windows, doors, interior walls and partitions not necessary for structural integrity of the building. Furniture and furnishings are also the property of the unit owner.
b. The association is responsible for maintenance, repair and replacement of the common elements, and the cost of doing so is a common expense, payable by all unit owners..
c. Responsibility for limited common elements, in the absence of specific language in the Declaration, is with the association. Frequently, however, the cost of repair, maintenance or replacement is assigned to the unit owner to which the limited common element is attached.
d. The Declaration may provide that an expense benefiting fewer than all of the units is assessed exclusively against the units benefited.
In questionable cases, the board of directors determines the issue.
Condominiums cost money to run, and like most organizations, enact a yearly budget. Unit owners are billed periodically for common charges in the percentages set out in the Declaration. They may also be billed for maintenance and repairs to their limited common elements, services provided by the Association for their benefit, assessed fines, and other items.
Voting by Unit Owners
"One person, one vote" does not apply to owners of condominium units. Each unit has voting power permanently associated with that unit, assigned by the declaration. The voting power could be one (1) or some other number. If two or more people jointly own a unit, they still have only the vote assigned to the unit. If someone owns more than one unit, they have the combined voting power of each unit.
Unit owners can generally vote only to amend the condominium documents, to elect or remove directors and (with Maine Condominium Act condominiums) to ratify the budget, and to approve any special assessments. All other decisions are made by the board of directors.
Different formulas apply depending on the question being voted on:
-in elections for the board of directors, a director is elected by majority (or plurality) vote of the voting power present and voting.
-in amending the and other condominium documents, approval generally requires that a certain percentage of the total voting power in the association approve. Unit owners who do not vote are counted as "no" votes.
-in budget ratification votes, the budget is ratified unless a certain percentage of the total voting power in the association votes no. Unit owners who do not vote are counted as "yes" votes on the budget.
Unit owners generally cannot cast absentee ballots. They generally must be present at the meeting where the matter is to be voted on, either in person, or by giving a proxy to someone who will be attending the meeting. Proxies have specific legal requirements for their validity.
Voting by Directors at Board Meetings.
Directors have one vote each at meetings of the board.
Directors cannot give a proxy to another person to cast a vote at a board meeting.
Directors can (and often do) attend meetings by electronic means, such as speakerphone or Skype,
1. Annual meetings of owners are an important part of every condominium or homeowner association. All owners are given notice of the meeting in accordance with the documents. The officers of the association give reports about the past year activities, including maintenance and financial. This is the meeting when elections for new members of the board are held. Members may also vote on any amendments to the governing documents. The meeting may be part social event.
2. Budget meeting, which may be combined with the annual meeting, is where members vote on ratificaiton of the annual budget (for Maine Condominium Act condominiums).
3. Special meetings, which may be held when a specific need arises. Matters to be decided at a special meeting are limited to the subjects listed in the notice of meeting.
Owners who do not attend meetings frequently are asked to give proxies to people who can attend.
The annual meeting of owners should be a social as well as a business event, where everyone can reconnect. The place of the meeting should be comfortable. There should be time for social chat before the meeting and during breaks. This will encourage attendance and strengthen the social ties of your community.
Directors meet periodically in regular meetings or special meetings to take up the business of the association. By statute, owners/members of the association are given reasonable notice of these meetings and have the right to attend them. Although owners are members of the association, they are not members of the board and have no automatic right to participate in the meeting itself, and can speak only with permission of the chair of the meeting.
Insurance is an often boring and always complex topic. However, maintaining proper insurance is one of the most important jobs of the board and the owner. The task is complicated by the fact that two insurance policies are in play: the association policy and the unit owners policy. The coverage contained in those policies should be coordinated to eliminate gaps. An owners insurance agent must examine the associations required insurance and the definition of "unit," both found in the condominium declaration, to be sure that no gaps in coverage exist between the policies.
Association Insurance Policies
The condominium association is required to carry property insurance and liability insurance in accordance with the condominium acts and the condominium documents. Considerations:
-does the association property damage policy also cover the units? (most do).
-full replacement cost or depreciated value?
-policy limits for property and liability. Is it high enough? Does the policy provide for full replacement value?
-cause of loss. Is it "broad form" or "special form." Special form covers more.
-are betterments and improvements covered? (i.e those things made or improved since the unit was originally constructed.)
-what is the deductible? Are unit owners responsible for paying the deductible, and under what circumstances? (Associations tend to have high deductibles on their policy)
Individual Unit Owner Policies
Unit owners should have their own insurance, HO-6, with proper endorsements, covering their unit. Considerations for Unit owner's insurance:
-liability limits for occurances inside the unit
-furniture and furnishings coverage within the unit, which are generally not covered by the association policy
-improvements and betterments to the unit, if not covered by the association's policy
-damage to the unit in an amount less than the association's (often high) deductible. Condominium documents often require the unit owner to pay for damage to their unit, up to the amount of the associations deductible
-Causes of loss not covered by the association policy, such as ground water infiltration or sewer backup.
-Loss Assessments of $1,000 unless a policy endorsement is purchased, covering special assessments to pay for damage to the condominium not otherwise covered by insurance.