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Commercial Condos - Beware the Condo Association

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If you happen to live in a condo, then you'll easily understand why a small business considering purchasing a commercial office condo needs to know about how and when to interface with the Board of Directors of the condo association. However, if you own a small business but have never dealt with a condo board, then you should be aware of the rights and obligations involved before purchasing an office condo.

Just as with any type of building there the common spaces that are mutually and equally shared, a commercial office condo is operated based on the Bylaws developed and adopted by that condo board. One of the requirements outlined in those Bylaws is how often the Board of Directors must meet, what repairs or changes require board approval and what repairs or maintenance can be done by the management team of the commercial condo.

Of course, you want to understand the other portions of the Bylaws as well because these binding agreements control how you can or cannot use the building. For example, you would expect to see in a set of Bylaws that any damages done to common areas by visitors to your office condo are your responsibility. You might also expect to find clauses which prevent owners from drastically changing the exit doors to their condos and other similar restrictions on use or changes.

The Board of Directors of a commercial condo association is made up of elected officers that are owners or designated representatives of owners of units in the building. When a commercial condo is first completed and the building opened for purchase of units, the board may be made up of the developer and other designates that have direct interest in the development. However, after a period of a year or once there are sufficient owners to build a sound, responsible board from, officers are elected from the owners.

You may think, at first glance, that control of everything is given to the selected owners that are elected to the board of directors. This really isn't true at all. The board can, without bringing a motion before the condo owners association members, take care of some expenditures and other business as outlined in the Bylaws. But all major changes are brought up as business during a Condo Association Board of Directors’ meeting, which must be announced formally in plenty of time for owners to notice and attend. In other words, you get a vote in any actions which might impact your business significantly.

In mixed use properties there may be more than one Association involved. Master associations and sub-associations should be used when the users of the units in a single condominium are restricted to significantly different uses. An example would be a condo that has a combination of residential, retail and office uses. In those situations there could be more opportunities for deadlock votes. For that reason dispute resolution to include mediation should be include in the Bylaws.

The best way to interface with the board of a commercial condo association is to attend, or have a designated representative attend, each meeting of the Board of Directors. This way, if any unexpected business is brought up, or if you need to bring up an issue, you'll have your ownership represented.

If you know you need to bring up a topic before the board, it should be sent in writing well before the meeting to the President of the Board of Directors so that it can be placed on the agenda. Taking an issue up on the fly can backfire and fail to get your issue noticed.

An even better way to keep up with what's going on with the board and to interface your business with them is to agree to hold a position on the board of directors. Most condo association board meetings are not lengthy and are critical to the maintenance of the lovely commercial condo office you purchased into.

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2 responses to “Commercial Condos - Beware the Condo Association”

  1. Allen Olson Says:
    Thanks for helping to educate the small business owner how buying can make more sense then leasing.

    I have just converted a 14 unit neighborhood strip mall into business condominiums and have found that most buyers have no idea what the benefits of buying are and that potential buyers are not aware that there is such an opportunity available.

    I found that a significant part of a small business owner retirement is the building they own.

    Keep up the promotion....................Al
  2. Heather Carlile Says:
    "I found that a significant part of a small business owner retirement is the building they own."

    I completely agree. We are in our 4th year of developing office condominium projects in Texas. The business owners really do look at this as an investment in their business and themselves. When they are ready to retire they can sell the business but not the building and collect income and own the building in an LLC and charge the business rent for additional income taxed lower than their personal income. Their are endless possibilities with this investment.