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Subject: Wrong CCRs put in place
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RichardP13


Posts:0


01/03/2015 8:16 PM  
Glen

Sorry, I can't follow anything you wrote.
JanetB2
(Colorado)

Posts:4211


01/03/2015 10:34 PM  
Posted By NpS on 01/03/2015 5:03 PM
Would appreciate some clarification on what 7 units 1 lot means.

Nor do I understand issue of potential objections from mortgagees. Financially, there shouldn't be any real difference.


NpS:

The developer constructed seven different homes on one piece of "Real Property" noted as Lot X. Therefore, seven different owners own only one piece of real estate. They DO NOT have lot boundaries dividing their homes. The issue Richard has is who should be required to have an insurance policy for the property. In essence if seven families own and share one piece of real estate then you have one policy and divide the cost between all owners such as in a condo building (which is many units built on one piece of real estate property).

The issue potentially Richard will have is if you have seven different policies ... Then which policy would cover of something happens on the land.

Mortgages require certain Insurance coverage to protect the collateral for their loans. If seven individuals have separate policies and lets say for example someone steps in a hole and breaks their leg .., then which policy is responsible?
RichardP13


Posts:0


01/04/2015 12:09 AM  
Sad part, nobody gets it.

Think we should just close this discussion.
NpS
(Pennsylvania)

Posts:3987


01/04/2015 5:43 AM  
Posted By JanetB2 on 01/03/2015 10:34 PM
Posted By NpS on 01/03/2015 5:03 PM
Would appreciate some clarification on what 7 units 1 lot means.

Nor do I understand issue of potential objections from mortgagees. Financially, there shouldn't be any real difference.


NpS:

The developer constructed seven different homes on one piece of "Real Property" noted as Lot X. Therefore, seven different owners own only one piece of real estate. They DO NOT have lot boundaries dividing their homes. The issue Richard has is who should be required to have an insurance policy for the property. In essence if seven families own and share one piece of real estate then you have one policy and divide the cost between all owners such as in a condo building (which is many units built on one piece of real estate property).

The issue potentially Richard will have is if you have seven different policies ... Then which policy would cover of something happens on the land.

Mortgages require certain Insurance coverage to protect the collateral for their loans. If seven individuals have separate policies and lets say for example someone steps in a hole and breaks their leg .., then which policy is responsible?


I get all that Janet. But when you insure your house, you are not insuring the land. If your house burns down, the demo and reconstruction costs are typically covered - but that insurance is generally on the building itself.

So my question was - if the Association is going to carry 1 policy on 7 houses (which would not insure the land itself), or if each of the 7 homeowners has a single policy on the 7 houses (again with no insurance on the land itself), then I would see no reason why the insurance companies would object.

Glen suggested that the reason the mortgage companies would be concerned is that the houses are so clustered together that, if one HO is uninsured, and a fire spread through the development, the requirement of an umbrella policy for all 7 homes would have some justification. If this is the case, then my question is, isn't this simply a matter of an insurance question? I am not saying that the insurance issue is simple - only that if the appropriate insurance coverage can be purchased, then the 7 HOs can get what they want.

If I was one of the 7 owners, I would want a sit down with a knowledgeable insurance agent, fix the insurance coverage issue by unanimous consent, and forget about the rest. I am sure that the mortgage companies will need to be brought into the conversation, but once again, I cannot see where they would object if they are brought into the conversation. For starters, mortgage companies are interested in ability to repay. And if comparable coverage can be obtained at less cost (which I think was the original concern), then the HOs are better positioned to pay the mortgages.

Sikubali jukumu. Read all posts at your own risk.
JanetB2
(Colorado)

Posts:4211


01/04/2015 1:55 PM  
Posted By NpS on 01/04/2015 5:43 AM

I get all that Janet. But when you insure your house, you are not insuring the land. If your house burns down, the demo and reconstruction costs are typically covered - but that insurance is generally on the building itself.


NpS:

I would suggest you read your homeowner's insurance policy. There are many different sections and which "fire" is only a part. When you obtain homeowner's insurance you are insuring the "boundaries" of your "real property". If someone was walking up a homeowners front porch steps and breaks an ankle the homeowner insurance policy could be filed against … if a tree branch on a large tree in a homeowners front yard in a wind storm broke off and damaged a vehicle parked on the street then the homeowner policy could be filed against. These are items which can happen on the "land" within the boundaries of the "real property" to be covered by most homeowner's insurance policies to some extent (some owners might carry higher coverages to protect against possible lawsuits).


This link for Davis-Stirling has many definitions … and the following are a couple of items which may help this situation make more sense:

http://www.davis-stirling.com/MainIndex/CIDMenu/tabid/371/Default.aspx#axzz3Nt05sTlX


Richard believes this development is and HOA; however, per this link:

http://www.davis-stirling.com/MainIndex/CIDMenu/tabid/371/Default.aspx#axzz3Nt05sTlX

It States (and I added some bold emphasis):

HOMEOWNERS ASSOCIATION (HOA)
A homeowners association (HOA) can be incorporated or unincorporated. It is formed for the purpose of managing a residential development. HOAs are generally associated with developments consisting of single family homes (SFH) on individual lots. The homes can either be detached, stand alone structures or they can be townhomes. In the Davis-Stirling Act, it falls under the category of Planned Unit Developments.

Although the term "HOA" is associated with single family homes, it is sometimes used generically to refer to all forms of residential associations. There are many variations in the spelling of the term. It is sometimes used in the singular "homeowner association." Some practitioners will break it into three words, i.e., home owners association. Some will make it singular possessive "homeowner's" while other use the plural possessive "homeowners' association." The most common usage seems to be the non-possessive plural "homeowners" association.

There is a distinction between homeowners associations (HOAs) and property owners associations (POAs).


Now if you look at Condominium you will find at this link the following:

http://www.davis-stirling.com/tabid/1447/Default.aspx#axzz3Nt05sTlX

CONDOMINIUM
Condominium Defined. Condominium is Latin in origin and means co-ownership. Unlike stock cooperatives, condominium owners hold title to their units. A condominium is defined as "an estate in real property, consisting of an undivided interest in common in a portion of real property coupled with a separate interest called a unit." (Civ. Code §4125.) The covenants, conditions and restrictions ("CC&Rs") recorded against the entire project restrict the use of the property and define the responsibilities of association as a whole as well as the owners individually.

A condominium is typically a cube of air although it can be water or earth. Condominiums are often vertically stacked units (usually from 3 stories to 30 stories) and consist of the air space bounded by the floors, ceilings, and perimeter walls surrounding the unit. However, they can just as easily be side-by-side such as mobilehome condominiums where cubes of air with surveyed boundaries sit on lots within which owners place their mobilehomes.

Condominium Project Defined. A "condominium project" is a form of common interest development. A "condominium" is "an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit . . . ." (Civ. Code §4125.) Unless the governing documents provide otherwise, the common area of a condominium project is owned by the owners of the separate interests as tenants in common. In addition to the combined ownership of the two estates enumerated above, the major characteristics of a condominium include an agreement among the unit owners regulating the administration and maintenance of the property. The agreement is reflected in the governing documents of the association; which includes the declaration and any other documents, such as bylaws, operating rules of the association, articles of incorporation which govern the operation of the common interest development. (Civil Code §4150.) The development's restrictions should be contained in its recorded declaration, but may also be contained in an association's internal rules or bylaws. The CC&R's bind all owners of separate interests in the development. (Ritter v. Churchill (2008) 166 Cal.App.4th 103.)


Because all the units are located on one lot vs. seven different lots this development is not an HOA. The CCR's in place are most likely NOT wrong as Richard has stated in this thread title and with regards to his original question. This can be further defined with the following link (which link is titled "Condominium Lots" yet shows up titled "Airspace Condominiums") and which states:

http://www.davis-stirling.com/MainIndex/Airspacesubdivision/tabid/3981/Default.aspx#axzz2SXHJqiDw

AIRSPACE CONDOMINIUMS
In a typical condominium unit, the unit is defined as the air space bounded by the perimeter walls, ceilings and floors of the structure surrounding the unit. In an airspace subdivision, the "condominium lot" is a cube of air defined by a survey and legal description of the lot. Everything within the survey stakes is the condominium lot or subdivision condominium. Accordingly, all structures and improvements within the boundaries of the lot are improvements to the condominium which are owned and maintained by the owner (unless the documents state otherwise).

This type of subdivision may refer to the lots as "airspace condominiums," "airspace lots," or "condominium lots." It is not uncommon to see this type of ownership used for mobilehome developments, especially conversions from rental parks. Mobilehome park conversions are allowed under California Government Code §66427.5


So now NpS ask yourself the following question: With the above definitions from Davis-Stirling … How does seven different owners obtain lets say Fire Insurance for "airspace or in essence a cube of air" when most likely they do not own the shell? In essence as stated in the definitions … In a condominium all structures and improvements within the boundaries of the lot are improvements to the condominium which are owned and maintained by the owner (which in this case is seven different owners) as tenants in common living on one individual Lot.

Keep in mind a renter who is renting a home can only insure their "personal contents" and cannot insure the structure because they do not personally own the structure. In condos generally the Association insurance covers the structures and the individual owners are responsible for any contents located within their personal owned "air space". Ask yourself … would an insurance company have to pay for any property an individual does not own and which is owned by an Association?
RichardP13


Posts:0


01/04/2015 2:21 PM  
Janet

You are way off base.

NpS
(Pennsylvania)

Posts:3987


01/04/2015 3:43 PM  
Janet

The difference between your perspective and mine is that you want to focus on the formal structure and I want to focus on the pragmatic realities. I try to look at the situation as if I was one of the seven owners. As an owner I would be concerned that the cost of insurance is 4x what it could be and that I am restricted from buying cheaper insurance on my own. I would be willing to spend money to change this arrangement and reduce this cost. And if I could do it without anyone trying to change the organizational structure of my association even better, because: (1) I know that dealing with organizational change can involve additional costs that I have no desire to spend; and (2) I have seen too many situations where an organizational change becomes overly complex and does not adequately resolve the original problem.

Other than the insurance issue, I doubt that the average HO here has any concern for the fact that his association is an HOA or a Condo. He lives in a single home and there is minimal intrusion into his life. He can sell his house (which includes any interest he has in the association) without interference.

The only recommendation I have made is to reach out to a knowledgeable insurance specialist to explore alternatives.

My response to the specifics of your post:

As to Richard's belief that the wrong CC&Rs are in place, I don't really care one way or the other. If the issue can be addressed without an overhaul, the HOs will be happy.

The first flaw in your presentation is that each of your definitions includes the word "generally" or "typically." Yet we already know that this is an atypical situation. The concept of an airspace condominium probably has no relevance here - I was going under the presumption that each owner owns the interior and exterior of his single home. I think that is a reasonable assumption here - I would be surprised if it were different.

The second flaw is your belief that ownership alone determines insurability. Not so. A non-owner can have an insurable interest. That is why I recommend taking the conversation to an insurance expert where the details and options can be explored without cost.

I spoke about fire damage, not because it is the only coverage, but because it the biggest risk to the mortgage company's interest in the house. And once again, I did not take the conversation further because I would be getting into greater levels of detail that I know little about.

So in summary, what matters to me is: What's the goal? If the stated goal is to reduce insurance costs, then I have attempted to respond to that one issue. It's the only issue of true concern - No one really upset because they live in a HOA or a Condo - Just people who don't want to waste money if they can avoid it.

Sikubali jukumu. Read all posts at your own risk.
EllieD
(Vermont)

Posts:445


01/04/2015 4:31 PM  
RichardP,

Do I understand correctly?

1. Re the seven (7) Building, 7 Unit Condominium you are posting about: The construction is one (1) Condo Unit per standalone building. Outward appearance, is that the seven (7) buildings, houses, that comprise the Condominium Association, are very similar in appearance to the single family houses, buildings, in the adjacent Associations of seven buildings each, on either side, which are in PUDs, or Home Owners Associations, but not Condominiums.

And re the 7 Unit Condominium group being discussed, the Insurance coverage is, was “goofed up” both the Master Policy Coverage and the individual Unit Owner HO-6 policies, probably, because the Insurance Agent(s) did not realize that they were writing Insurance for a Condominium Association.

And you are questioning the maintenance requirements, etc., who is responsible for what, in that 7 Unit Condo Association.


2. Leaving “maintenance” behind for the moment, you implied, as I interpret, that there can be confusion as to whether or not, a particular grouping of residential buildings are condominiums or not. I agree, based on some internet searching I just did.

Seems that in California - a Condominium Association can be referred to as a Home Owners Association – as for example “XYZ Homeowners Association” even though it was declared a Condominium. But not always, as I found that there are also Condominiums that identify themselves correctly, as “XYZ Condominium Association”.

The point being, you cannot determine with any certainty, whether or not an Association is a “true” Condominium Association, or whether it is a Homeowners Planned Development Association, without referring to its Documents.

As I understand, an Association, community, development, grouping of residential buildings, are Condominiums ONLY IF its Documents state that (declare) they are Condominiums using words such as:

“Declarant intends to develop the Property into a Condominium project under the provisions of California Civil Code Section 1351(f)” AND/OR files a “Condominium Plan” as described in the D-S Act, AND describes the Condo Unit per D-S, and perhaps contains a statement such as, “The boundaries of Units 1 to xx, inclusive, are as shown and defined on the condominium plan hereof filed, pursuant to section 1351 of the California Civil Code”.

The above words referencing the D-S Act, Civil Code 4125. "Condominium Project" Defined.
Old: Civ. Code 1351(f)

(a) A “condominium project” means a real property development consisting of condominiums.

(b) A condominium consists of an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel map, or condominium plan in sufficient detail to locate all boundaries thereof.

The area within these boundaries may be filled with air, earth, water, or fixtures, or any combination thereof, and need not be physically attached to land except by easements for access and, if necessary, support.

The description of the unit may refer to (1) boundaries described in the recorded final map, parcel map, or condominium plan, (2) physical boundaries, either in existence, or to be constructed, such as walls, floors, and ceilings of a structure or any portion thereof, (3) an entire structure containing one or more units, or (4) any combination thereof.


3. You recently brought your own Association into the discussion and wrote:

“That is my development. But, we are listed as a Condominium project solely because of the description of "Units". And you wrote: “I live in a condo project, BUT, its only considered a condo because of the use of the word UNIT. Can help how the City of Los Angeles designates such things. I pay for my own house insurance. The HOA master policy handle on the common elements, streets, pool.

OK, I believe that I understand what you wrote, BUT a few questions:

Where are you listed as a Condominium project?

WHY is it solely because of the descriptions of “Units”?

Are your Units (living area) described in terms of Perimetric (perimeter) Boundaries, and are there any Exclusive use Common Areas defined? Per the definitions below:

Separate Interest. When someone buys a condominium, their "real property" is typically defined as a cube of air bounded by the unfinished surfaces of the perimeter walls, ceilings and floors. All improvements contained in that space, such as carpets, cabinets, light fixtures, plumbing fixtures, etc., are part of the real property defined as the owner's "separate interest" because it is separate from real property that is owned in common with other members of the association, i.e., "common areas."

Exclusive Use Common Area. Exclusive use common area, sometimes referred to as "restricted common area," is defined as those common areas outside the owner's separate interest which are for the exclusive use of that owner.

4. You wrote: “In California, we don't have separate legal separation for Condo or HOA as some other states, like Florida have. Apparently, how one development is labeled a condo in one city could be labeled a PUD in another.”

OK, California does not have a separate Acts, Statutes. Vermont does not either. It does not really matter.

All that is needed in order to have a Condominium Association is a State Statute of some sort, that defies what a Condominium is, and provides for a Condominium Association to be formed by “Declaring” that a particular residential development, a single building, or groups of building(s) containing living units “is a Condominium”.

IF that particular residential development is NOT “Declared” to be a Condominium, then it is not a Condominium, but rather it is a Homeowners Association or PUD or (names vary).


5. Richard, hoping that you will provide additional information – I will stop here - because, unless I have misunderstood what you have posted about “your Association”, it has, as I interpret, Homeowner, PUD Association, “written all over it”, and not Condominium.

While the seven (7) Units, subject of this thread, appear to be “true, real” Declared Condominiums, even though unexpected, as apparently the adjacent Associations on either side are NOT Condominiums, but rather they are PUD Homeowners Associations.
JohnC46
(South Carolina)

Posts:9320


01/04/2015 4:56 PM  
NPS said:

The second flaw is your belief that ownership alone determines insurability. Not so. A non-owner can have an insurable interest. That is why I recommend taking the conversation to an insurance expert where the details and options can be explored without cost.

My HOA (single homes) Covenants state the HOA will be named as a co-payee on ones home insurance. The reason for this is so no one can collect and walk away leaving the home say burnt to the ground. You would be amazed at the number of insurance agents say no, this is wrong and we cannot do it. After a letter/call from our attorney, the insurance agent's reply becomes OK, no problem.

Be wary of insurance and real estate agents. They like to play lawyer.



RichardP13


Posts:0


01/04/2015 5:00 PM  
It appears NpS has hit the nail on the head.

In California, we don't have distinctions two different classes of associations as some other states have, they are all homeowner associations.

Having worked in the mortgage industry and underwrote a few loans, what an investor is looking for is fire coverage, to protect their interests. They don't care who pays for it, just that is it in place.

The second insurance agent the HOA hired fully agrees these units should have their own polices in place paid for by the unit owners, but is legally held to what is in the CCRs, rightfully so. A mistake was clearly made and evidenced by other HOA having the exact same characteristics. I could care less about what they are called, just that the proper language is in place.
TimB4
(Virginia)

Posts:16704


01/04/2015 5:07 PM  
Richard,

If I may inquire? Why does your State now say Alaska?
RichardP13


Posts:0


01/04/2015 5:25 PM  
The question is who pays for the insurance, you or the association. Think everyone is splitting hairs.
RichardP13


Posts:0


01/04/2015 5:26 PM  
Posted By TimB4 on 01/04/2015 5:07 PM
Richard,

If I may inquire? Why does your State now say Alaska?



I was testing to see if I could change states. Guess it worked.
RichardP13


Posts:0


01/04/2015 5:29 PM  
Posted By JohnC46 on 01/04/2015 4:56 PM
NPS said:

The second flaw is your belief that ownership alone determines insurability. Not so. A non-owner can have an insurable interest. That is why I recommend taking the conversation to an insurance expert where the details and options can be explored without cost.

My HOA (single homes) Covenants state the HOA will be named as a co-payee on ones home insurance. The reason for this is so no one can collect and walk away leaving the home say burnt to the ground. You would be amazed at the number of insurance agents say no, this is wrong and we cannot do it. After a letter/call from our attorney, the insurance agent's reply becomes OK, no problem.

Be wary of insurance and real estate agents. They like to play lawyer.






The question is who pays for the insurance, you or the association. Think everyone is splitting hairs.
JohnC46
(South Carolina)

Posts:9320


01/04/2015 5:59 PM  
Posted By RichardP13 on 01/04/2015 5:29 PM
Posted By JohnC46 on 01/04/2015 4:56 PM
NPS said:

The second flaw is your belief that ownership alone determines insurability. Not so. A non-owner can have an insurable interest. That is why I recommend taking the conversation to an insurance expert where the details and options can be explored without cost.

My HOA (single homes) Covenants state the HOA will be named as a co-payee on ones home insurance. The reason for this is so no one can collect and walk away leaving the home say burnt to the ground. You would be amazed at the number of insurance agents say no, this is wrong and we cannot do it. After a letter/call from our attorney, the insurance agent's reply becomes OK, no problem.

Be wary of insurance and real estate agents. They like to play lawyer.






The question is who pays for the insurance, you or the association. Think everyone is splitting hairs.




In our case, the individual home owner pays for their own insurance.

KerryL1
(California)

Posts:7052


01/04/2015 6:09 PM  
Btw, Richard, you may know this: The first condominium in CA, ca. 1925, was the Venetian Court on the sandy beach in Capitola and banks of the Soquel River 10 miles south of Santa Cruz. Each attached unit has a different floor plan--sosme one story, some two story, and each Spanish Rivival style exterior is painted a different bright Med hue. Charming as all get out!
RichardP13


Posts:0


01/04/2015 7:29 PM  
Posted By KerryL1 on 01/04/2015 6:09 PM
Btw, Richard, you may know this: The first condominium in CA, ca. 1925, was the Venetian Court on the sandy beach in Capitola and banks of the Soquel River 10 miles south of Santa Cruz. Each attached unit has a different floor plan--sosme one story, some two story, and each Spanish Rivival style exterior is painted a different bright Med hue. Charming as all get out!



Have a feeling they have a different set of Architectural Guidelines than most, especially when it come to paint color. Reminds me of last year's visit to Venice, Italy.
KerryL1
(California)

Posts:7052


01/04/2015 8:01 PM  
Capitola's famous for its begonias and there's a festival every year. Indeed, gondoliers glide over Soquel Creek (or they use to)!
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