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Don't be Blinded by not Knowing Maui County Condominium News.
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| What is a Condominium?
The best way to understand the concept of condominium ownership is to picture an apartment that you own. Your ownership extends inward from your interior walls, floors and ceilings. You are also a partner, with all of the other owners in the community, in the ownership of the exterior structure (the foundation, exterior walls and roof) as well as any common areas and amenities such as swimming pools, cabanas, tennis courts, etc.
Hawaii REALTOR Journal, July 2004
"Twenty-five percent of Hawaiis housing units are held in condominium ownership. For decades, Hawaii has had the highest percentage of condominium housing units in the U.S.
A Condominium is not defined by any physical structure. Condominiums may come in many forms and encompass a variety of uses as may be permitted by zoning regulations. Some of the allowable uses by zoning include: residential, commercial, industrial, and agricultural.
A condominium is a form of ownership of real property regardless of the architectural style of the apartment, be it in a highrise, townhouse, or detached unit.
Condominium ownership is described as ownership of an apartment (or unit) and a percentage of undivided interest in the common elements. The apartment owner is entitled to exclusive ownership of the apartment but the land is a common element, owned jointly in common with other apartment owners in the condominium project. Examples of other traditional common elements are lobbies, hallways, roofs, and roadways.
Yard areas or parking spaces which are provided for an apartments exclusive use (versus ownership) are usually identified as limited common elements.
The administration, management, and operation of the condominium project are handled by an Association of Apartment Owners via a board of directors. The directors carry out their responsibilities as fiduciaries and accordingly make decisions for the best interest of the whole condominium community."
What do I get for my condominium fee?
The gift of leisure time to do all the things that you have wanted to do but couldnt because you were tied to the yard and maintenance chores.
Your condominium fee usually offers you the following benefits:
- A beautifully landscaped community.
- Professional maintenance of all lawn and landscaping outside of your private lanai or yard.
- Continued maintenance of the fencing and roofs.
- Pool maintenance.
- Maintenance of community common elements such as parking areas.
- Master insurance policy which covers everything that is delivered with the unit including flooring and appliances. All you need to buy is the equivalent of a renters insurance policy to cover your personal contents. You could possibly need additional insurance if there have been extensive upgrades in the unit.
- Reserve fund for common element replacement. When the time comes for major repairs such as roofing or paving, the money will be available.
- Cost of water and sanitation fees.
- Trash pickup.
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| How Do You Create a Condominium Project?
A Condominium is a special form of ownership of real property regardless of the architectural style of the apartment, highrise, townhouse, or detached unit. Condominium ownership is an ownership of an apartment (or unit) and a percentage of undivided interest in the common elements (e.g. land, lobbies, hallways, roofs and roadways). The project must contain two (2) or more apartments as defined by statute. The number and type of apartments must meet zoning requirement. The number of dwelling units is determined by the zoning district. Neither the Real Estate Commission nor the Counties approve or disapprove what property can become a condominium property regime (CPR).
In the creation of a condominium project, there are requirements of the Condominium Property Act, Chapter 514A, Hawaii Revised Statutes, and the respective county in which the project is located that must be met.
A condominium project is created by recording in the Bureau of Conveyances and/or filing with the Office of the Assistant Registrar of the Land Court the master deed or lease, the declaration of Condominium Property Regime, the condominium map, and the bylaws of the Association of Apartment Owners. A condominium project is not created by the Commission.
If a developer desires to offer and sell the condominium apartments, the developer shall submit the required documents and fees to the Commission. The Commission does not approve or disapprove the condominium project but reviews the developers proposed public report to determine whether the public report adequately discloses all material facts to prospective buyers based on the information and documents submitted by the developer.
No apartment in a condominium project shall be offered for sale prior to the issuance of an effective date for the developers preliminary, contingent final or final public report.
It is strongly recommended that the condominium documents be drafted with the advice of an attorney familiar with Chapter 514A, HRS.
For further information and the application for the public report, please refer to the Commissions website: www.hawaii.gov/hirec.
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| What is Condo Living?
What is condominium living? If you look at sales brochures for most condominium projects, you'll see phrases such as "Enjoy the freedom of condominium living". The glossy pictures that go with this campaign will show casually dressed people laughing. No worries or problems. No need to mow the lawn or be bothered by other chores. Go enjoy life. Your unit is your castle and that's all you need to know. This is not the true reflection of condominium living. Yes, your unit is your own, but remember, you're living with people above, below, and/or to the side of you. In this multi-family residential set-up, you're living close to people of different age groups, cultural and economic backgrounds, who may be from different parts of the world. A certain degree of tolerance, neighbourliness, and mutual respect is needed. True, you're not living with them, just near them. But you could be together for years and years.
This is what condominium living is all about. You are living in a community within a community. Think of it this way: the condo board of directors (board) is similar to a municipal government in the sense that both are responsible for its citizens. The board approves a budget each year to meet operating expenses (what your maintenance fees will be calculated from), sets policies for the better governance of its citizens, and meets regularly to make decisions (on maintenance programs, financial issues, and matters such as by-law violations) to ensure that the complex is maintained.
It is also the truest sense of democratic government where citizens vote at Annual General Meetings and extraordinary General Meetings. Of course, there are pluses and minuses to community living. Here are some questions to ponder:
Are you a good neighbor?
Like apartment tenants, condominium residents share walls, floors/ceilings, hallways, entrances and parking areas with their neighbors. Respect for other peoples right to the quiet enjoyment of their homes is part of the arrangement. Your neighbors will appreciate (and hopefully reciprocate) your efforts to turn down the volume, walk softly, close your doors quietly and limit your vacuuming to reasonable hours. If youre a noisy neighbor, you wont be welcome.
Are you willing to follow the communitys rules?
Condominium owners are bound by the associations covenants, conditions and restrictions (CC&Rs). These thick legal documents cover everything from special assessments and the election of the associations officers to the allocation of parking spaces and the use of recreational facilities. Owners who fail to follow the rules can be fined, and most associations have the power to attach a lien to an owners property if the fines or assessments arent paid. If youre willing to follow the rules and regulations, you might be happy living in a condominium setting. This also includes picking up after your dog when walking your pet around the grounds. Also, do not walk your pet around windows or flower beds where the damage, and stink, cause many problems.
Are you comfortable with joint financial responsibility?
Single-family homeowners neednt consult their neighbors about financial decisions with respect to their own property. Condominium owners, on the other hand, must come to an agreement (by consensus or voting) on a variety of maintenance and repair matters. Should an older roof, unclear signs or fading siding be replaced this year or next year? Should a special assessment be collected for an emergency repair or extra service? How much money should be spent on landscaping? How often should the garbage be collected? If you relish the opportunity to make responsible decisions along with others, condo living could be a good choice for you.
Are you prepared to volunteer your time for association business?
True, some condominium owners never volunteer. However, your lack of participation will be noticed by your neighbors, particularly in a smaller association. Being part of the community means you should take your turn at serving on the board of directors, joining a special committee, getting estimates for repairs or taking responsibility for other tasks that benefit the group as a whole. If youre willing to pitch in, youll earn the gratitude and respect of your fellow owners.
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Condo-tels and Condominiums on Maui
By Tricia Morris
President and Owner,
Hawaiis Premiere Mortgage
As reprinted from the Maui News
When making the decision to purchase a condominium or a condo-tel on Maui, its important to understand the difference between the two types of properties and the lending qualifications that may apply to each one.
A Condo-tel is a condominium complex that has a rental program where the units can be rented out on a short-term basis. The income may be collected and distributed to everyone the investment pool or the rental may be operated as an individual program where your unit is rented and receive the income from that unit.
A Condo-tel generally has amenities such as maid service. It usually has a front desk to make it easy for guests to come in and pick-up their keys. There may also be a desk where guests can purchase vacation activities. Management fees will vary according to the degree of on-site management and the amenities offered.
A Condominium is individually owned and is either occupied by the owner or rented on a long-term basis, generally six months or longer. A condominium complex that does not have short-term rentals will generally not have amenities such as those in a condo-tel complex.
In both cases, the interior space of the property is individually owned with the balance of the property (both land and buildings) owned in common by the owners of the individual units. The size of each unit is measured from the interior surfaces of the exterior walls, floors and ceiling. The balance of the property is called the common area. Some properties may also include the area of a parking space(s) in the definition of the individual owners property. Condo-tels and condominiums can either be fee simple or lease hold properties.
On Maui, most owners rent their units out on a short-term basis during the time they are not going to be using the property. They may be using the income to help pay for a more upgraded property than they would have otherwise purchased, or they may be using the rental income to assist them in their retirement planning. Others only rent out their unit during high season, such as Christmas, and utilize IRS guidelines that allow the owner of a second home to rent their home for up to 10 days a year without taxing the income.
As a result, individuals that are only going to spend a part of their time in the unit own a high percentage of the condominiums on Maui. This is in contrast to properties on the mainland that tend to be owner occupied. The unique characteristics of the Maui condominium real estate market increase the importance of working with a qualified mortgage broker who is familiar with the various programs and requirements of local lenders regarding condominium financing.
Mainland lenders will generally decline to loan on condominium in a complex that is not at least 60% - 70% owner occupied unless they have specific programs geared to these types of loans at significantly higher interest rates. This is because most mainland lenders will follow the guidelines of independent national agencies known as Fannie Mae and Freddie Mac that buy loans from individual lenders. This process allows the lender to insure their profit on a loan and to protect themselves against interest rate fluctuations and foreclosure.
Both agencies developed stricter rules on condominium lending as a result of the Savings and Loan crisis of the 1980s and the high rate of foreclosures in Florida real estate following an over building and boom period. If a lender cannot sell this type of loan to Fannie Mae or Freddie Mac it will stay with the lender as a portfolio loan. This is a loan that stays in the lenders portfolio as opposed to a mortgage backed security sold to the agencies. Due to the cost of managing the portfolio loan, and the higher risk factor, the interest rate can be slightly higher.
Local lenders on Maui are much more familiar with the condominium market and the specific conditions that drive it. As a result, they are more willing to make loans on condominiums and condo-tels because they are often quite familiar with the individual properties. They know which ones tend to be more upscale and they have a clearer picture as to the potential rental income that might be derived from the property.
Purchasing a condominium or condo-tel can be easier if you work with a lender who is familiar with resort properties as opposed to one that specializes more in the first time home buyer market. Generally you can expect to put 20% down for your purchase and (depending on your need for rental income to offset the monthly mortgage payment), you may be able to obtain an interest rate that is only slightly higher than a second home mortgage.
Its also a good idea to work with a real estate agent that has experience in this area. Discuss your goals with them. Are you planning to retire in a few years, or will this be a long-term investment? Are you making a second home purchase or will you be using the property for only a few weeks out of the year? A qualified real estate agent can also assist you in locating a mortgage broker who can find the right lender to meet you individual needs. As always working with a mortgage broker often saves you money and doesnt ever cost you more than going to a lender directly.
The market on Maui is unique. It is different even from Honolulu where the rate of owner occupancy in condominiums is more like the mainland. In todays strong market the prepared and knowledgeable buyer, using local expertise in the selection and financing of their property, will almost certainly do well and enjoy a great property with the peace of mind that comes with owning real estate on Maui.
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| Welcome to Condominium Law
You have just moved into your new condominium after an exhaustive credit check and long waiting period. On the first night in your new home, you are startled from your chair by the blare of the evening's episode of "Diagnosis Murder." The lovely elderly lady downstairs, whose hearing is on the way out, has just disrupted an evening of perfect peace. So what do you do?
And noise could be just the beginning. Think about
- age or pet restrictions,
- parking regulations,
- insurance problems,
- unresolved repair issues, or
- condo "commandos" who want to control your life.
The list is endless!
So what do you do when you have a condominium problem? Where do you find an answer?
This Condominium Law Database will help you. It explains the law in easy-to-understand language. This web site with its 400,000+ words covers the National Condo Law for all fifty U. S. states, the District of Columbia, and even U.S. territories. It is the most comprehensive collection of condominium law questions and answers on the Internet.
Unit owners, board members, community association managers, and anyone else who needs to understand condominium law can access this wealth of information without drowning in a sea of legal terms. Numerous hyperlinks empower you to locate, find, and interpret condominium law promp tly and easily.
Those who have questions about condominium law can check this database before consulting an attorney. In some cases you can solve the problem yourself; in other situations, this database enables you to understand what your attorney requires and prepares you to negotiate with your attorney more effectively.
Our question and answer format helps you find information quickly. If you are on the fast track, you can peruse only those questions and answers that interest you.
For general information about this Condominium Law Database, read our FAQ.
Thank you for your interest and welcome to the challenging world of condominium law!
(Licensed to practice law in Florida and Washington, D.C.) Joseph S. Paglino, Esq.
(Licensed to practice law in Florida, Louisiana and New York.) Martin M. Solomon, Esq.
(Licensed to practice law in Ohio.) David V. Dimlich, Esq.
Visit Condominium Law Website
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| The Condominium Management Manual
The Condominium Management Manual for Condominium Owners, Boards and Management Firms.
Manage Your Facilities in a Professional and Cost Efficient Manner with this New and Innovative Approach to Condo Management.
- The Condominium Management Manual guides you to:
- Professionally select your condo management firm using a performance work statement - First in the industry
- Measure your condo management firm's performance within that performance work statement - First in the industry
- Determine the manpower required in managing, operating, and maintaining the facility - First in the industry
- Manage operational man-hours to more firmly establish the facility budget - First in the industry
Ask yourself these questions.
- Is your association being provided the services for which it is compensating the management firm? What are these services?
- Does the Association have a baseline document that provides it with adequate guidance by which it can objectively measure the performance of the management firm? What would be the basis for measuring the performance of the firm in the performance within the agreement?
- What basis does the association have for determining that the costs of operations are appropriate to the value received? What baseline is used to make this determination?
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ONE NEGATIVE ANSWER to ANY of the ABOVE QUESTIONS - YOU NEED THIS MANUAL
For more information on the information provided in this 300 page manual, please visit our website.
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