CHAPTER SEVENTEEN
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Common Interest
Purchasers in a common interest subdivision own or lease a separate lot, unit, or interest, along with an
undivided interest or membership interest in at least a portion of the common area of the entire project.
Normally, an association of the owners manages the common area. Condominiums, planned developments,
stock cooperatives, and community apartment projects are the four types of common interest subdivisions.
A condominium consists of an undivided interest in common in a portion of real property coupled with a
separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel
map, or condominium plan in sufficient detail to locate all boundaries thereof. The area within these boundaries
may be filled with air, earth, or water, or any combination thereof, and need not be physically attached to land
except by easements for access and, if necessary, support. The description of the unit may refer to: (i)
boundaries described in the recorded final map, parcel map, or condominium plan; (ii) physical boundaries,
either in existence, or to be constructed, such as walls, floors, and ceilings of a structure or any portion thereof;
(iii) an entire structure containing one or more units; or (iv) any combination thereof. The portion or portions of
the real property held in undivided interest may be all of the real property, except for the separate interests, or
may include a particular three-dimensional portion thereof, the boundaries of which are described on a recorded
final map, parcel map, or condominium plan. The area within these boundaries may be filled with air, earth, or
water, or any combination thereof, and need not be physically attached to land except by easements for access
and, if necessary, support. An individual condominium may include, in addition, a separate interest in other
portions of the real property. A condominium may, with respect to the duration of its enjoyment, be (l) an estate
of inheritance or perpetual estate; (2) an estate for life; or (3) an estate for years, such as a leasehold or a
subleasehold.
Typically, an owner of a condominium owns in fee simple the air space in which the particular unit is situated
and an undivided interest in common in certain other defined portions of the whole property involved. An
association and its elected governing board perform the management functions.
A planned development is defined in Civil Code Section 1351 (b) and (k) as consisting of lots or parcels
owned separately and lots or areas owned in common and reserved for the use of some or all of the individual
lot owners. Generally, an owner’s association provides management, maintenance and control of the common
areas and has the power to levy assessments and enforce obligations which attach to the individual lots.
A stock cooperative is defined in Section 1351 (m) of the Civil Code as a corporation which is formed or
availed of primarily for the purpose of holding title to improved real property, either in fee simple or for a term
of years. All or substantially all of the shareholders receive a right of exclusive occupancy of a portion of the
real property, which right is transferable only concurrently with the transfer of the share(s) of stock.
Most stock cooperative projects are of the apartment house type, operated by a board of directors and including
community recreation facilities. The homeowners’ governing association is usually a nonprofit mutual benefit
corporation.
A limited equity housing cooperative is a corporation which meets the criteria of a stock cooperative and
complies with the requirements of Section 33007.5 of the Health and Safety Code. To assure that limited equity
housing cooperatives provide decent housing for low and moderate income families, the Health and Safety
Code mandates the following conditions:
1. The corporation holds title as a nonprofit public benefit corporation pursuant to the Corporations Code OR
the corporation holds title (or a leasehold of at least 20 years) subject to conditions which will result in
reversion to a public or charitable entity upon dissolution/termination.
2. Any resale of a unit shall not exceed the sum of the original consideration paid by the first occupant, the
value of any authorized improvement to the unit and an increment based upon an inflation factor, not to
exceed 10% per year.
3. The “corporate equity” can only be applied for the benefit of the corporation or a charitable purpose.
4. The management documents for the corporation can be amended only by a vote of at least 2/3 of the
owners.