Common interest developments have existed in one form or another for centuries. All common interest projects result in each owner having exclusive control of some defines space, and shared control, through the association of owners, of common land and improvements. The three (3) types of common interest developments in New York include condominiums, homeowners associations (HOAs), and cooperatives. These common interest communities are subject to stipulated requirements and remedies contained in the New York Business Corporation Law or Non-for-Profit Corporation Law and case law applying and interpreting these statutes. New York Condominiums are also governed by the New York Condominium Act, Article 9-B, Real Property Law (the “Condominium Act”). Article 23-A of the New York General Business Law, commonly referred to as the Martin Act, governs the public offering of any securities, including interests in a cooperative or condominium venture.
Condominiums
A Condominium property involves the division of real property defined as the “Units” and common property defined as “Common Elements”. The Units are individually sold and the owners also obtain an undivided interest in the Common Elements. The condominium is created by virtue of a master deed, by which the owner becomes a member of that condominium and agrees that the association shall maintain the Common Elements and manage the community affairs.
Homeowners Associations
HOAs include, but are not limited to, developments consisting of individual homes or lots deeded in fee simple where a declaration of covenants, restrictions, easements and liens or an equivalent document, or restrictions contained in individual deeds or any other mechanism or covenant or local law or ordinance requires that homeowners or lot owners contribute cooperatively to the ownership and/or maintenance of property used in common. An HOA also includes a development of individual homes or lots deeded to individual purchasers in fee simple associated with an organization which owns or maintains property for the common benefit of all the homeowners or lot owners where the homeowners or lot owners are required to contribute to the upkeep of the common property.
Cooperatives
The creation of a cooperative apartment involves no transfer of a fee interest to the unit owner. Rather, the entire parcel is transferred to a corporation and the ownership interest in that corporation is divided amount the unit owners, who are is sole “shareholders”. The corporation issues long-term leases called proprietary leases, to its shareholders, entitling them to exclusive occupancy of specific units.
