Declaration of Condominium:
In Florida, condominiums are established under the Condominium Act by recording a declaration of condominium in the public records of the county where the land is located. the declaration of condominium is the document or the set of documents that actually creates the condominium. It establishes the covenants and restrictions which will affect the property and govern the residents during the entire existence of the condominium.
The declaration of condominium includes within its definition any amendments which may be made to it and all exhibits which are attached to the foundation document and incorporated into it by reference. The combined parts of the declaration of condominium create and elaborate set of covenants and restrictions and establish the basic rights and responsibilities for the residents and guests of the property.
Articles of Incorporation:
The article of incorporation, or corporate charter, is the document which establishes that part of a condominium responsible for the maintenance, management and operation of the common elements and the condominium property. The declaration of condominium must make provision for the articles of incorporation within its own test or as an exhibit. The articles themselves must define the membership rights of each unit and the voting rights which each unit owner has in the association's operation.
The term "articles of incorporation" includes the original document creating the association and all amendments to it and any other documents which define the existing form, membership and responsibility of the association. For example, the definition also includes articles of consolidation or articles of merger if several condominium associations have been combined into a single organization. The articles of incorporation may permit the association to operate more than one condominium, either in their original form, or by amendment, merger or consolidation.
The articles of incorporation may establish a corporation for profit or a corporation not-for-profit to operate the condominium. Under most circumstances, the articles of incorporation establish a "corporation not-for-profit" under Chapter 617 of the Florida Statutes to govern the condominium. A corporation not-for-profit is not tax exempt but it is a corporation where no part of the income may be distributed to the members, directors or officers of the association.
The articles of incorporation for a corporation not-for-profit may contain all of the powers traditionally granted to profit-making-corporations in Florida, except as restricted by the Condominium Act or by the articles of incorporation themselves. The articles of incorporation become effective and the association may begin to operate when they are filed with the Division of Corporations of the Department of State.
The articles of incorporation of the association define its basic structure and its areas of responsibility. The bylaws are subordinate to the articles of incorporation; they set up the internal governance for the association; and they establish the procedures for carrying out the responsibilities of the association. They define the powers and the manner for exercising those powers by the board o directors and by each of the association's officers. Stated differently, the operation of the association is governed by the bylaws of the association. A copy of the actual bylaws must be attached to the declaration of condominium as an exhibit in order for a valid condominium be created at the time of recording. Technical defects in the bylaws themselves, however, will not affect he validity of the condominium's creation.
When creating the bylaws, there is a substantial amount of discretion available to establish the specific procedures which the association will follow. There are some required provisions that the Condominium Act mandates for the bylaws and if they are not actually set forth in writing, the Condominium Act states that they shall be deemed to be included. Among these requirements are restrictions on the us of proxies, the requirement that all board meetings be open to the members of the association, and the requirement that notice be posted for all board meetings.
The law requires procedures for the election of board members, adopting the budget, and a requirement that records of the association be open to unit owners. The bylaws must provide for at least three officers-a president, a secretary and a treasurer- and there must be a provision for mandatory nonbinding arbitration of disputes involving unit owners and the association. Because a portion of these mandatory requirements may not physically be within the bylaws, the board of administration and the association officers must be aware that portions of the bylaws may be found in the Condominium Act and not as a part of the bylaws actually attached to the declaration. The procedural rights established by the bylaws are for the benefit of association members, and nonmembers do not have standing to require that an association abide by its bylaws.
Rules and Regulations
The supplemental restrictions authorized by the bylaws and promulgated by the board of administration are traditionally referred to as the "rules and regulations." The bylaws of the association may provide for the authority to adopt the rules and regulations and may set out the procedures to follow when adopting them. The rules and regulations of the association are similar to the restrictions and covenants contained with in the declaration of condominium, but they are not clothed with the strong presumption of validity and enforceability that accompany restrictions actually found in the declaration.
The rules and regulations promulgated by the board of administration are best described as supplemental to the covenants and restrictions in the declaration of condominium. These rules and regulations cannot contradict or contravene those in the declaration or its attached exhibits. The standard of reasonableness for rules and regulations of the board must be carefully applied to ensure enforceability. The rules and regulations must also be within the scope of the board of administration's authority, as described in the bylaws, to be valid.
Some supplemental rules and regulations may be attached to the declaration of condominium as an exhibit at the time of recording, while others consist of unrecorded rules adopted by the board of administration. Under either circumstance, the rules and regulations are supplemental to the man covenants and restrictions governing the condominium.
To fund the non-profit association's operations and special needs, each unit owner is required to contribute a proportionate share. The proportionate share required to fund the annual budget and general operations of the association is known simply as an "assessment." The funds required from a unit owner, other than the assessments required to fund the annual budget, are referred to as "special assessments."
Collectively, the assessments and special assessments must be enough to cover the payment of all of the association's capital obligations and operating expenses. A unit owner may not avoid the responsibility for assessments by waiving the use or enjoyment of all or part of the condominium property.
"Common expenses" include all of the expenses for the operation, maintenance, repair and replacement of the common elements and association property; the costs of carrying out the powers and duties of the association; and other expenses defined as common expenses by the Condominium Act, the declaration of condominium or the other documents creating the condominium. Common expenses may include reasonable transportation services, in-house communication services and security services if they were provided from the time that control of the board was transferred from the developer. Common expenses may also include hurricane shutters when their installation has been approved by a vote of the unit owners.
The definition of common expense allows the board of administration wide latitude for it’s fund raising depending on the character and nature of the condominium community. However, the
expenses are always subject to challenge if they result from an abuse of the board's discretion or when they are not within the proper business scope of the association.
The third part of a condominium is the corporate entity which is responsible for the management and operation of the condominium property. It is referred to as the condominium association or simply as the "association." The board of administration (directors) is the governing body of the association, and the board is responsible for administration of the association.
Current provisions of Florida's Condominium Act require that the association be either a corporation for-profit or a corporation not-for-profit. As a general rule, most condominium associations fall into the not-for-profit category. Prior to January 1, 1977, unincorporated associations were permitted and some can still be found operation in Florida.
All unit owners are members of the association as an appurtenance to their ownership of a condominium parcel, but no owner may act for the association simply by virtue of being a member. Through the board the shared facilities of the condominium property, to promote harmony and uniformity within the condominium community, and to enforce the restrictive covenants contained in the declaration of condominium and other documents that regulate the condominium.
Unit owners in some condominiums may have a membership in more than one "association." In addition to the corporation responsible for management of the condominium, other corporate entities may also be an "association" under the terms of the Act. These might include a master association or a recreation association, and such association is governed by the Condominium Act when (1) it operates or maintains real property in which unit owners have use rights, (2) where membership in the entity is composed exclusively of unit owners, and(3) where membership by unit owners is required by the condominium documents.
Knowledge of the condominium documents and the covenants and restrictions that govern both the rights and limitations of condominium living is the responsibility of every owner of a condominium parcel. The "prospectus," or offering circular, is the introductory synopsis to the entire set of condominium documents governing the community. The prospectus is initially prepared by the developer of the condominium at the beginning of the project and it must be distributed to each new purchaser of a condominium unit.
The prospectus sets forth in outline form a summary of all the restrictions, financial obligations and liabilities of an owner in the condominium. It also sets forth the commitments and promises made by the developer, and the responsibilities which must be kept and maintained by the condominium association. The prospectus must be accompanied by a copy of the annual financial report and a separate summary sheet entitle "Frequently Asked Questions and Answers" informing each owner about key provisions in the condominium documents relating to use restrictions, voting rights, individual financial responsibilities and other important matters.
The "Frequently Asked Questions and Answers" sheet must be maintained by the association. Under most circumstances, neither the prospectus nor the "Frequently Asked Questions and Answers" are recorded in the public records like the balance of the condominium documents.