Who Owns a Development’s Common Areas?

KEY BISCAYNE, Fla. – Trick question. The answer depends on whether you live in a Condominium Association or a Homeowners Association.

In Florida, these two types of residential Owners Associations function and are regulated in very different ways. In fact, each one comes under the jurisdiction of a separate Chapter in the Florida Statutes – Chapter 718 for Condominium Associations (COAs) and Chapter 720 for Homeowners Associations (HOAs). Each association must also follow its own Governing Documents, which are recorded in the county where the building or community is located.

Important – I am NOT an attorney. For interpretation and application to specific circumstances of anything in this article, you must consult a Florida-licensed attorney.

It is interesting to note that Florida’s Condominium Act (FS 718) uses the term common elements, while the Homeowners Association Act (FS 720) refers to common areas. This language difference is the basis for today’s discussion.

In Condominium Associations, each individual unit owner also owns an undivided share of the common elements.

In Homeowners Associations, the Association’s corporation owns the common areas.

This distinction may not seem like much at first, though it directly influences:

• Voting procedures and proxies
• Board of directors authority
• How financial reserves are handled
• Maintenance and repair responsibilities
• How changes can be made to the common areas

Condominium common elements are jointly owned by all the individual unit owners, so more oversight and protection are required in order to safeguard those owners’ legal and financial interests.

In very basic terms, in a 100-unit condominium building each unit owner also owns a 1/100th share of all the common elements (areas). That share cannot be separated and sold separately. It is part of owning an individual unit and transfers to a new owner when that unit is sold, a fundamental element of ownership.

Common elements in a condominium property may include:

• Building structure and exterior
• Hallways
• Lobby, fitness and meeting rooms
• Elevators, mechanical, electrical rooms
• Stairs
• Surrounding grounds and landscaping
• Parking lots and structures
• Swimming pools and decks
• Other structures or amenities on the property

On the other hand, HOA communities usually contain single-family homes and townhouses/villas, and individuals own their residences with no shared ownership of the common areas. This is the major difference between HOAs and COAs in Florida.

Since Homeowners Association common areas are owned by the association’s corporation, individual owners are partially insulated from some of the legal and financial issues that could affect condo owners.

Common areas in HOAs can include:

• Streets and sidewalks
• Clubhouses and maintenance buildings
• Landscaping in common areas and along streets
• Guardhouses and gates
• Community swimming pools, restaurants, recreation facilities

You might be thinking that if an HOA corporation owns the community’s common areas, and owners are members, the owners get to vote on how those common areas are maintained, improved, and managed. Not exactly. Owners are members of the association, not individual shareholders in the corporation that runs the community.

Just about all Florida Condominium and Homeowners Associations are organized as not for-profit corporations. This is so they can engage in the legal and financial activities that contribute to proper association operation. The elected board of directors runs the corporation in similar fashion as the boards of major for-profit US corporations.

Not all matters regarding COA or HOA common elements/areas are open to having the owners vote on them. Since a board of directors is elected to manage the association’s business, the board is able to make some decisions without an owner vote.

Example – If you own a few shares of a public corporation (Microsoft, Amazon, etc.) you don’t get to vote on every decision that comes before the corporate board.

Because individual HOA property owners do NOT jointly own the common areas, the Board of directors has more authority to make decisions on its own regarding the maintenance, repair, upgrade, and additions to common areas that the corporation owns.

Since condo owners DO jointly own the common areas, they have more input and voting rights on how common elements are managed and maintained, especially when it comes to spending association money.

Every owner in a building or community has the responsibility to understand how their Association is organized and how it functions. If you are not as familiar with your COA or HOA as you may like to be, use this article as a good place to start, then look through your own Governing Documents for specific guidance. When you have questions, a Florida-licensed attorney is the best source of accurate information and legal interpretation.