A unit owner in a
condominium owns a fractional interest in the common elements, as
explained above. The sum of the fractional interests of all the
unit owners in the regime is 100%.
The legal relation between the unit owners is that of
“concurrent” ownership of the common elements. Concurrent ownership
simply means you and the others own the same property at the same
time. The legal name for such concurrent ownership is “as tenants in
common.” Legally this also means that each one of the unit owners
has the use of the undivided whole or all of the common elements.
For this reason, it is necessary in the Declaration to provide for
“limited” common elements when necessary to prevent all owners from
access, for example, to a porch. Any common element, like the
driveway, that is not a limited common element is a general common
element, open for all to use.
Because of the
ongoing legal relationship of the co-owners, the condominium statute
requires that annexed to the Declaration is a document known as the
bylaws. Section 499B.15 of the Code of Iowa sets out six numbered
paragraphs containing about a dozen particular requirements that are
the minimum requirements of the bylaws of the regime. The first
sentence of 499B.15 says that the bylaws must provide for the form
of administration and specifying the powers and manner of removal of
the body that will be in charge of such administration. The second
sentence says these bylaws must provide for the method of calling or
summoning the co-owners to assemble, the percentage necessary for a
quorum, who presides over meetings and who keeps the minute book
“wherein resolutions shall be recorded.”
In short, that
section does not require that the form of organization be a
corporation.
If a group of people
regularly meet and adopt bylaws, you have an unincorporated
association. There is a lot of law about unincorporated
associations. One question is whether or not it can be sued in its
association name. There are some landmark cases on this. One is
Boyer v. Iowa High School Athletic Association, 258 Iowa 285, 138
N.W.2d 914 (1965). In Boyer the court said, “… an association may
be sued by its common name with joinder as parties defendant of one
or more of those identified with organization who are representative
of the class.” To me that means a plaintiff could sue the home
owners’ association (HOA) and join just one of the directors as
representative of the other owners.
Because of the
questions presented by having an unincorporated homeowners
association I have always advised my clients to use a non-profit
corporation for the HOA. This in turn introduces the question of
whether to have two sets of bylaws.
Section 504A.12 of
the Code contains minimum requirements of the corporate bylaws of an
Iowa not-for-profit corporation. Section 504A.11 provides that a
not-for profit can have one or more classes of members. (Members
are to a non-profit what shareholders are to a for-profit.) 504A.12
says the power to alter or amend the bylaws is vested in the
directors unless otherwise provided in the Articles of
Incorporation.
I provide in my
Declaration that the administration is governed by the attached
bylaws. Then the bylaws that I attach provide all of the items
required by 499B.15 and also all of the items required by 504A.12.
Then in my Articles of Incorporation I provide that the Board of
Directors shall adopt the bylaws of the regime that are required by
499B.14 to be annexed to the Declaration under 499B.3.
In this fashion I
provide for a regular non-profit corporation to function as the form
of organization of the HOA; and I make it clear that the corporate
bylaws and the regime bylaws are the same instrument. In this way
the corporation can purchase liability insurance and you have a
legal entity that can sue or be sued if that ever becomes
necessary. That entity can also agree to indemnify individual unit
owners in certain circumstances, again depending on how it is set
up. I usually include provision concerning the limits of the
Directors’ liability and for indemnifying present or former
directors, officers, employees, members and volunteers in the
Articles for the non-profit corporation. This page was written on
04190.
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CONDOMINUMS - Condo Bylaws