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Condominium and PUD Ownership

Builders, in an effort to combat the dual problem of an increasing population and a declining availability of prime land, are increasingly turning to common interest developments (CIDs) as a means to maximize land use and offer homebuyers convenient, affordable housing.

The two most common forms of common interest developments in many states are Condominiums and Planned Unit Developments, often referred to as PUDs. The essential characteristics shared by these two forms of ownership are:

  1. Common ownership of private residential property
  2. Mandatory membership of all owners in an association which controls use of the common property
  3. Governing documents which establish the procedures for governing the association, the rules which the owners must follow in the use of their individual lots or units as well as the common properties
  4. A means by which owners are assessed to finance the operation of the association and maintenance of the common properties

Before continuing further, it may be helpful to clarify a common misconception about Condominiums and PUDs. The terms Condominium and PUD refer to types of interests in land, not to physical styles of dwellings. Therefore, when homebuyers say that they are buying a townhouse, it is not the same as saying that they are buying a condominium. When homebuyers say that they are buying a unit in a PUD, they are not necessarily buying a single-family detached home. A townhouse might legally be a condominium, a unit or lot in a Planned Unit Development, or a single-family detached residence. The terms Condominium or PUD will say a great deal about the ownership rights the buyer will receive in the unit and the interest they will acquire in the common properties or common areas of the development.

Common interest developments offer many advantages to homebuyers, such as low maintenance and access to attractive amenities. However, there are restrictions and duties which come with ownership of a Condominium or PUD that buyers should be aware of prior to purchase.

To acquaint you with various aspects of ownership in common interest developments, the Land Title Association has answered some of the questions most commonly asked about Condominiums and PUDs.

What are the basic differences between ownership of a Condominium and ownership of a PUD?

The owner(s) of a unit within a typical Condominium project owns 100% of the unit, as defined by a recorded Condominium Plan. As well, they will own a fractional or percentage interest in all common areas of the Condominium project.

The owner(s) of a lot within a PUD owns the lot which has been conveyed to them-as shown in the recorded Tract Map or Parcel Map-and the structure and improvements thereon. In addition, they receive rights and easements to use in common areas owned by another-frequently a Homeowner’s association-of which the individual lot owners are members.

The above are basic descriptions and should not be considered legal definitions.

Besides ownership of my unit, what other amenities (common areas) will I be acquiring use of and how will I own them?

Common interest areas may span the spectrum from the ordinary-buildings, roadways, walkways and utility rooms-to the extravagant-equestrian trails and golf courses-with more usual amenities including community swimming pools and clubhouse facilities.

Your ownership rights in common areas will be spelled out in your project’s Declaration of Covenants, Conditions and Restrictions (CC and R’s). The subject of CC and R’s will be expanded upon later in this brochure.

As we stated in the answer to the previous question, Condominium owners own a fractional or percentage interest in common with all other owners in the Condominium project, in all common areas. PUD owners receive rights and easements to use of common areas through their membership in a Homeowner’s association, which typically owns and controls the common areas. Some PUD projects, however, provide that the individual homeowners will own a fractional interest in the common areas. Again, in this case, a Homeowner’s association will have the right to regulate the use of the common areas and to assess for purposes of maintaining the common areas.

Check your CC and R’s and association Bylaws (basically, rules governing the management of the development) to insure that you understand your rights to use of your unit and common areas.

What services will my Homeowner’s assessments help to finance?

Your Homeowner’s assessments support not only the easily recognizable-building and swimming pool upkeep, landscape maintenance-but also the unseen-association management and legal fees and association insurance.

As well, reserves must be factored into your assessments, including reserves for replacement of such items as roadways and walkways. In the case of condominiums, where ownership is usually limited to airspace within the walls, floors and ceiling of the unit, reserves will frequently fund replacement of such items as roofs and plumbing.

Each member of the Homeowner’s association, upon purchasing their unit, must receive a pro forma operating budget from the association. Basically, this will be a financial statement of the income and obligations of the association, which must include an estimate of the life of the obligations covered under the assessments and how their replacement is being funded.

What happens if I fail to pay my Homeowner’s assessments?

Delinquency fees will be added onto the unpaid assessments.

Should your delinquency continue, the association has the right to place a lien upon your property. The lien may lead to a foreclosure if the delinquency is not paid.

Of what importance are CC and R’s and Bylaws?

CC and R’s and Bylaws are the rules and regulations of the community, meant to guide the use of individual properties and common areas. Buyers should be aware that CC and R’s and Bylaws may be written so as to restrict not only property use, but also to restrict owners’ lifestyles, for instance, spelling out hours during which entertainment, such as parties, may be hosted.

CC and R’s and Bylaws are highly important and should be thoroughly examined and understood prior to purchase. They bind all owners and their successors to the rules and regulations of the community. Failure to follow those rules and regulations can be considered a breach of contract. Legal action may be taken against the homeowner for any such breach.

At what point in the real estate transaction will I be allowed to review a copy of my CC and R’s and Bylaws?

Legally, it is the responsibility of the owner to provide the prospective purchaser with the governing documents of the development (CC and R’s and Bylaws), the most recent financial statement of the Homeowner’s association and notice of any dues delinquent on the unit.

The law states that these items should be delivered as soon as practicable; however, the prospective buyer should request to see them as early as possible. If you do not fully understand what is stated in these documents, consult a real property attorney.

Should I object to items included in the CC and R’s and/or Bylaws, will I have the opportunity to terminate those items prior to taking ownership?

No. The process required to terminate these restrictions is often complex and costly. Termination of restrictions will require, at least, a majority vote by members of the Homeowner’s association, and may require litigation.

What if I have further questions regarding Condominium and PUD ownership?

Ask any questions you may have before you buy! Don’t wait to take ownership to find out about restrictions and regulations affecting your Homeownership rights.

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Testimonials

11/2018 
 
We bought our Kona home in November 2018 and are so grateful we worked with Lance and Kimi. We started working with them in the spring of 2018, when we visited Kona and Lance took us to see many properties and informed us about microclimates and different neighborhoods. Then we headed backed to Boston and Lance kept in touch with us about listings, the market, and the vog. One time he texted us a picture of a gorgeous clear day, and a few days later he texted a picture of a voggy day, saying he wanted us to see that too - that's the kind of people Lance and Kimi are, honest and upfront. Once we found a home their guidance and hard work were absolutely indispensable to us. Great negotiating skills, responsiveness to our many questions and concerns via text, email and Skype, and through the entire closing process holding our hands and digging up and/or checking all documents with our best interests in mind. There was so much to keep track of and so much we weren't even aware of that needed to be checked, we are beyond grateful that we worked with Lance and Kimi. They are experienced, knowledgeable, efficient, thorough, professional, and kind.
You can't go wrong with Lance and Kimi!

 
Denise & Joe  
2/19/2019
Lance, we love that your client has an agent who cares about them the way you do.
Love the idea of sharing the shifting market guide this way, and love even more your commitment to guiding and advising your clients through the buying/selling process. We are grateful to be your partner! 
Yours truly
Keeping Current Matters 
Charlotte P. H.

8/31/2018
What an outstanding experience we had with Lance Owens and Kimi Nagatoshi!! We gave Lance our thoughts about what we might be looking for in a new home on Hawaii Island and he showed us quite a number of places that fit that description. We hadn't thought we'd actually buy on that trip -- we were really only trying to see what we could afford -- but with what Lance showed us, we ended up putting an offer in after only 3 days of looking. And then Kimi went to work helping us through the entire process of the inspection, counteroffers, and, ultimately, the purchase. It's our dream home and we have both Lance and Kimi to thank! 
Karl and Mary 

Source: Realtor.com

Karl and Mary


8/30/2018
8/17/2018 
7/13/2017
5/22/2017
Lance and Kimi did a fantastic job selling our multiple lots in Kau. We continue to recommend Lance and Kimi to our friends!

Source: realtor.com

Kathy and John C.
5/18/2016 Aloha Lance! Thank you all for your “local kine” support of the Big Island Chocolate Festival this year. It was really very successful and your support helped us keep the ball rolling as we brought tickets in. I will let you know how much was raised for the schools, but wanted you to see this online news story that mentions your sponsorship. Hawaii 24/7 has quite a large readership. Thanks again! http://www.hawaii247.com/2016/05/15/big-island-chocolate-festival-names-top-confections/ Julie Ziemelis-Owner Ziemelis Communications Integrated Communications Expert-PR
2/29/2016 In 15+ years of Hawaii Mortgage Company dealing with thousands of realtors, it is very rare when you come upon agents who really care and love what they do and want to make the transaction as wonderful as possible for all parties involved. Lance and Kimi go above and beyond for their clients and the mortgage professionals (like us!) who they are working with. In a world full of mortgage regulations, Lance and Kimi make sure to keep everyone on track of the timelines to ensure closing on time, which benefits both the sellers and buyers. We are lucky to work with them and look forward to many more transactions together in the future! Maura K. Shannon Manager / Mortgage Loan Originator NMLS #339190 Hawaii Mortgage Company NMLS #232582 443 Portlock Road Honolulu, Hawaii 96825 Tel: 808-988-6622 Fax: 808-988-7722 Maura K. Shannon
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Kona Home Team
 Lance Owens RS-62947 | 808-936-8383 
Kimi Nagatoshi RS-76851 | 808-936-2575
LUVA LLC | RB-21030 | Office ID 2340 | Office 808-769-5111
75-240 Nani Kailua Dr. Suite 8, Kailua Kona, HI 96740