Understanding
the Mixed Use Association
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What to Consider
Before Purchase |
As more and more new community associations are
becoming part of the American landscape, a large number of
these properties are mixed use associations. These mixed use
associations have a different structure than the traditional
condominium or homeowners association and having clarity on
the unique dynamics involved is one of the keys to having a
pleasant experience when moving into this type of community.
A mixed use community can be either a horizontal
or vertical subdivision and will generally include residential,
commercial (hotel or office or both) and retail (shops and
restaurants) parcels. The developer, working with legal counsel,
creates a set of documents that assign the responsibilities
and controls within these communities in a way that is designed
to insure that everyone's interest is best protected. However,
as we are all aware, that is a task that is never perfect and
it is incumbent on prospective purchasers to be sure that they
understand what they are buying into. There are, by its very
nature, competing interests within this type of community;
homeowners who want peaceful enjoyment of their property, commercial
interests who want the public to have limited access and retail
interests who want unrestricted public access.
In addition to the different interests, there
is the question of to how to allocate authority and responsibility
for the operation of the associations: Below are two such methods
often utilized:
Most master documents are structured in a way
that gives most authority over any of the common areas, shared
facilities and limited shared facilities to the mixed use association
rather than the residential owner and their condominium/homeowner
associations. While the residential owners may carry the largest
financial burden, they usually have the least say in the operation
of the mixed use association.
While you, the purchaser, are buying a home,
the old saying that you are “King of your own castle” does
not completely apply here. Simply stated, unless the master
declaration provides otherwise, you the residential owner and
the condominium/homeowners association that you are part of
have very little or no control over:
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Exterior appearance of the building(s)
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Budget for the operation of the Association
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Public Spaces
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Public Access – pedestrian and vehicular
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Security
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Exterior Signage
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Parking – resident and guest
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Use of/or Restrictions on the Amenities
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Special Events
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Level of Service within the Association
While this type of structure may appear to be
unfair – in most cases it does work very effectively. The decision
making process, for the maintenance and operation of the association,
is transferred from a lay board of directors to a responsible
party that has a large vested interest in the success of the
overall association. This party (usually the hotel parcel or
commercial parcel owner) still has the fiduciary responsibility
to the community and the membership, however is not burdened
with the participatory democracy that, at times, can paralyze
a board of directors.
Items to look for prior to purchasing a residence
in a mixed use community:
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Fair treatment on the allocation of common,
limited common, shared facilities and limited shared
facility expenses. Who pays for what, how are assessments
determined?
- Voting allocations and voting rights.
- Controls on other types of users allowed into the mixed
use community that may impact quality of life.
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Are there limits on the changes that
can be made to the governing documents that would alter
the use of the property to the detriment of the residential
owners?
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Are there limits on the non residential
parcels as it relates to the hours of operation and ability
to have special events?
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What are the boundaries of your individual
unit and of the various associations that you will belong
to?
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Which of the various associations that
you will belong to has ownership for which components
of the physical plant?
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What entity or parcel owner is responsible
(responsible party) for the maintenance, operation, management
and reconstruction (if needed) of the building and/or
property in which the residential unit is located?
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What are the remedies available to the
residential owner if the “responsible party” is not performing
their function properly – can the books be audited – can
they (the responsible party) be replaced?
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What is the procedure for dispute resolution?
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What protections are there for the residential
owner against the deterioration or adverse use of the
other parcels within the mixed use association?
Armed with this knowledge, along with the counsel
of qualified professionals including your Realtor and attorney,
your experience as a member within a mixed use association
can be an enjoyable and rewarding one. The key, as with most
major business decisions, is to do your homework and know the
parties among which you are dealing.
Association Times' Staff Writer
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