It is a non-profit corporation registered with the State and managed by a duly elected Board of Directors. Its purpose is to maintain all common areas and to govern the community in accordance with the provision of the legal documents: CC&Rs, Bylaws, and Articles of Incorporation. The corporation is financially supported by all members of the homeowners association. Membership is both automatic and mandatory.
Associations and Management Companies form a working relationship. It is important to be in the right relationship. When choosing a management company it is important to ask many questions, for example:
Your management company should work for the Association as a whole and takes direction from the board of directors. It is the job of the management company to offer expert advise on the constantly changing laws the affect condominiums. They should assist in the future planning of know capitol improvements and help plan for the unknown. Be sure to ask as many questions as you can to feel comfortable with your decision.
In Michigan, condominiums consist of either units or common elements. Common elements are further subdivided into two categories: general common elements and limited common elements. Under most Michigan condominium documents, the difference between general common elements and limited common elements is important to determine who is responsible for maintaining, repairing and replacing damage to various areas of the condominium, which insurance policy applies (if any), and who has the ability to use and access certain areas within a condominium.
What may seem like a technical difference or mere legal jargon distinguishing general and limited common elements from one another may have significant repercussions for co-owners and associations alike in situations where there is damage to the condominium. While not always the case, most condominium documents specify that the association is responsible for the maintenance, repair and replacement of all general common elements. Typical documents also state the cost of maintenance, decoration, repair and replacement of all limited common elements shall be borne by the co-owner(s) of the unit to which the limited common element is appurtenant or for which the limited common element is assigned.
Similarly, the association’s responsibility for maintaining insurance on certain areas of the condominium is typically broken down by determining whether the area is a general or a limited common element. Most condominium documents specify that each co-owner is required to maintain insurance on the unit and that the association is required to maintain insurance on the general common elements. As for limited common elements, there are often overlaps in coverage where the condominium documents require both the association and the co-owners to maintain insurance..
Be informed, read your governing documents. The duties of the Association are clearly outlined in the Master Deed and Bylaws. The largest budget items are usually Insurance, lawn care and snow removal. It is very important that associations plan for future know repairs and fund a reserve account. A properly funded reserve account can elevate or at a minimum, lessen the burden of large assessments. Dues paid by co-owners are the only source of income your association has so it is very important to pay your dues on time. We always recommend that you volunteer to serve on your Board of Directors.
Yes. It is very important to have insurance. The extent of the policy you will need should be determined by your agent. Your licensed agent will consult your association master deed and bylaws where the association vs co-owner responsibilities are outlined. It is also recommended that you have your insurance agent consult the association's insurance carrier to determine the exact coverage you need.
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