We frequently hear people say that common areas are owned by their association. And, while that is true in many cases, it is not true when referring to condominiums. In fact, the single fact distinguishing condominiums from any other type of common interest community is how the property making up the project, other than the individual units, is owned.

The Colorado Common Interest Ownership Act (CCIOA) defines two different types of common interest communities – condominiums, and planned communities. Planned communities are anything that is not a condominium. A condominium is a common interest community in which portions of the property are designated for separate ownership (the condominium units themselves), and the remaining property is designated for common ownership solely by the owners. In other words, the owners own the common property, typically as tenants in common with each other, and the association doesn’t have title to any of the common area property. On the other hand, in a planned community, title to the common areas is typically conveyed to, and held by, the association.

You may be asking what significance this has, other than determining whether a common interest community is a condominium or a planned community. In fact, that is one of the first characteristics that we look for when we are asked (or when we ask) what type of common interest community the community is. This is particularly important when the answer is “it’s a townhome.”

Townhomes are only a style of architecture, but can be either a planned community or a condominium. The rights and responsibilities of the unit owners and the association are often determined based on whether a community is a condominium or a planned community.

In addition, in a condominium, because the common areas are owned by the unit owners, not the association, from a legal perspective, the Association only has the ability to take certain actions by acting as an attorney in fact (through a power of attorney) on behalf of the owners. This includes signing legal documents that encumber the common areas, adjusting insurance claims related to the common areas, and dealing with governmental entities when they are exercising their powers of condemnation. In addition, it is common for a condominium association to be able to exercise other powers on behalf of owners, in their name, when the declaration specifically gives that authority and the specified act has been approved by the required number of owners.

So next time you hear somebody saying “the association owns . . .” you’ll be able to determine whether, in fact, it owns anything.