Chapter 23—Condominiums, Cooperatives, PUDS, and Timeshares
MULTIPLE CHOICE
1. If a condominium owner fails to pay his portion of maintenance fees, the response of the owners’
association will be to
a.
evict him.
b.
place a lien against his unit.
c.
foreclose.
d.
report him to the local authorities.
2. If a condominium unit owner defaults on his mortgage, what effect will this default have on the other
unit owners in the same condominium project?
a.
It will create a lien on the other units as well.
b.
They must make his payments to protect themselves.
c.
It will create a lien on his condominium unit.
d.
They will be foreclosed.
3. Each of the following ownerships combines common ownership and exclusive possession of a
dwelling unit. All require dues to support the common elements. Which one allows separate,
individual ownership of a dwelling and a lot?
a.
Timeshare unit
b.
Condominium
c.
Cooperative apartment
d.
Planned unit development
4. A condominium rules declaration may be changed by
a.
whatever is stated in the rules declaration.
b.
at least 50% of the owner-occupied units.
c.
the condominium owner’s association.
d.
approval of the majority of the condominium unit owners.
5. Regarding ownership of condominiums,
a.
owners hold fee simple title to airspace within their units.
b.
owners register with the Federal Securities and Exchange Commission.
c.
purchasers own the airspace above their units.
d.
there is the right of survivorship.
6. A condominium owner can obtain all of the following EXCEPT
a.
severalty ownership of his share of the common elements.
b.
title insurance on his nit.
c.
a separate mortgage.
d.
joint tenancy ownership of his unit.
7. Individual units in a condominium development are classed as
a.
real property.
b.
common elements.
c.
cooperative elements.
d.
personal property.
8. Individual ownerships of separate portions of a building plus joint ownership of the common elements
is characteristic of a
a.
condominium.
b.
cooperative.
c.
co-op.
d.
PUD.
9. In a condominium, which of the following would be limited common elements?
a.
Assigned parking spaces
b.
Landscaped areas
c.
Unit of the caretaker
d.
Airspace in each unit
10. The owners’ association of a condominium meets yearly and makes such changes in the operation of
the common elements as is deemed best for all owners. It can change or amend all of the following
EXCEPT
a.
deeds to owners’ units.
b.
fire insurance carrier.
c.
bylaws.
d.
restriction against rental of units.
11. The term CC&Rs stands for
a.
covenants, condominiums and restrictions.
b.
conditions, chattels and regulations.
c.
commission, conditions and regulations.
d.
covenants, conditions and restrictions.
12. Restrictions on the type and color of drapes, that are visible to the outside, which a condominium
owner can use in his unit, would be found in the
a.
master deed.
b.
CC&Rs.
c.
bylaws.
d.
house rules.
13. Rules governing how a condominium owners’ association will be run would be found in the
a.
master deed.
b.
CC&Rs.
c.
bylaws.
d.
house rules.
14. A corporation that owns or leases the land and building and, in turn, leases space to its shareholders is
characteristic of a
a.
condominium.
b.
cooperative.
c.
joint venture.
d.
time share.
15. If you are an owner of a unit in a co-op apartment, your interest would be
a.
a tenancy at will.
b.
a proprietary lease.
c.
fee simple.
d.
a stock-option.
16. The governing body of a cooperative is called a
a.
cooperation.
b.
board of directors.
c.
cooperator.
d.
cooperative commission.
17. One of the advantages of condominium ownership versus cooperative ownership is that
a.
condominium ownership has no common ownership.
b.
cooperative ownership is free from periodic dues from members.
c.
cooperative ownership is usually corporate owned and sells stock through the secondary
money market.
d.
condominium units can be individually mortgaged.
18. Ownership of the common elements by an owners’ association is typical of which kind of
development?
a.
Condominium
b.
Planned unit development
c.
Cooperatives
d.
REIT’s
19. In a planned unit development, a developer would be likely to dedicate to the public all of the
following EXCEPT
a.
streets.
b.
roads.
c.
parks.
d.
common elements.
20. The purchaser of a timeshare week who wants to receive a deed to that specific week would buy a
a.
leasehold timeshare.
b.
right-to-use timeshare.
c.
fee simple timeshare.
d.
model timeshare.
21. The sale of a timeshare is regulated in a growing number of states. These regulations typically include
requiring that
a.
a timeshare developer and his staff must have a broker’s license.
b.
there is a “cooling off” period before sales are final.
c.
timeshares to be conveyed by deed.
d.
developers purchase a bond to insure against a loss in exchange privileges.
22. A timeshare offering typically includes
a.
no guarantee that the resort rental will be available for a long period such as 20 to 40
years.
b.
a long-term lease allowing use for one week each year with the rent paid in advance.
c.
a cooperative corporation selling shares of stock and proprietary leaseholds.
d.
a qualified fee estate for one or more weeks per year conveyed by deed.
23. State laws that provide the legal framework for condominium ownership may be identified by any of
the following terms EXCEPT
a.
strata titles act.
b.
cooperative housing act.
c.
condominium act.
d.
horizontal property act.
24. Condominiums developments are restricted to
a.
residential dwelling units.
b.
multiple-unit buildings.
c.
both a and b.
d.
neither a nor b.
25. Individual units in a condominium development are classed as
a.
separate property.
b.
common elements.
c.
cooperative elements.
d.
limited common elements.
26. In order to create a condominium development, a developer may
a.
construct a new building.
b.
convert an existing building.
c.
both a and b.
d.
neither a nor b.
27. Within a condominium development, common elements are owned by
a.
the owner’s association.
b.
all unit owners, who hold undivided interests in the elements.
c.
the condominium developer.
d.
individual unit owners as community property.
28. Which of the following would be classified as limited common elements in a condominium
development?
a.
Elevators
b.
Hallways
c.
Assigned parking spaces
d.
The manager’s apartment
29. The rules by which an owner’s association operates are known as
a.
bylaws.
b.
covenants, conditions, and restrictions.
c.
house rules.
d.
ordinances.
30. The purchaser of a condominium unit is obligated to abide by the development’s
a.
covenants, conditions, and restrictions.
b.
house rules.
c.
both a and b.
d.
neither a nor b.
TRUE/FALSE
1. The plan for a condominium development that converts a single parcel of land into individual separate
property estates and an estate composed of all common elements may be referred to as an enabling
declaration or a master deed.
2. In a condominium, the authority to raise homeowner fees (association dues) rests with the management
company.
3. The guest of a unit owner was injured by stepping on broken glass in the swimming pool at a
condominium. Liability for this injury would probably initially fall upon the developers.
4. The purchaser of a condominium unit surrenders some personal freedoms to community rule but
exchanges freedom of choice for freedom from responsibility.
5. Ownership of the interior space of your home and garage and an undivided interest in the building
structures, common areas, and land area of the entire project describes a cooperative.
6. Traditionally, the resale of cooperative shares has been financed by means of second mortgages on the
seller’s unit.
7. The governing body of a cooperative is called a board of directors.
8. The owners of a unit in a planned unit development hold title to the air above the unit and the land
beneath the unit.
9. In a planned unit development, the owner’s association can dictate interior and exterior colors, exterior
landscaping, and use of common areas.
10. Of the two principal forms of timeshare formats, the largest percent of the market is comprised of the
right-to-use format.
11. Under the right-to–use plan of timesharing, the purchaser holds title to real property.
12. Under the right-to–use plan of timesharing, the purchaser is a tenant in common with other users of the
unit.
13. The sale of timeshares is regulated in about 25 states by state legislation.
14. Those parts of a condominium that are owned by all the unit owners are known as common elements.
15. All states have passed condominium laws that are variously known as a state’s horizontal property act,
strata titles act, or condominium act.
16. In a condominium, the legal framework for the unit owners to govern themselves is called an owner’s
association and each unit purchaser automatically becomes a member.
17. The condominium association dues typically pay for all common expenses but do not include reserves
for replacement.
18. The concept of timesharing started in the U. S. and is limited to use in this country.
19. Ownership by a corporation that in turn leases space to its shareholders best describes a cooperative.
20. Money set aside from the budget for expenses that do not occur every month is called reserves.
COMPLETION
1. The rules that govern how an owner’s association will be run are called ____________________.
2. Those parts of a condominium that are owned by all the unit owners are called
____________________ elements.
3. A lease issued by a cooperative corporation to its shareholders is called a ____________________
lease.
4. A common element where the use is restricted to a specific unit owner is called a
____________________ common element.
5. An example of a limited common element could be an assigned ____________________ stall.
6. The regulations by which anyone purchasing a unit in the condominium must abide are known as
____________________, conditions, and Restrictions.
7. The maintenance fees for a condominium project are also called ____________________ dues.
8. The market value of each unit in a condominium reflects not only the value of the unit itself, but also
the value of the ____________________ ownership in the common elements that accompany the unit.
9. Compared to new construction, a condominium ____________________ is often simpler, faster, and
more profitable to the developer.
10. ____________________ timesharing is a method of dividing up and selling a living unit at a vacation
facility for specified lengths of time each year.
MATCHING
Choose the one most appropriate answer for each.
a.
annual meeting
k.
house rules
b.
board of directors
l.
maintenance fees
c.
bylaws
m.
management company
d.
covenants, conditions, and restrictions
(CC&Rs)
n.
owner’s association
e.
common elements
o.
proprietary lease
f.
condominium
p.
planned unit development (PUD)
g.
condominium act
q.
reserves
h.
condominium subdivision
r.
resort timeshare
i.
cooperative
s.
right-to-use
j.
cooperator
t.
separate property
1. individual ownership of a space of air plus undivided ownership of the common elements
2. ownership by a corporation that in turn leases spaces to its shareholders
3. roofs, stairs, elevator, lobby, and so on, in a condominium
4. an organization composed of unit owners in which membership is automatic upon purchase of a unit
5. type of lease issued by a cooperative corporation to its shareholders
6. a document that coverts a parcel of land into a stratified subdivision; also called a master deed
7. rules that govern how the owner’s association will be run
8. a shareholder in a cooperative apartment
9. charges levied against unit owners to cover the cost of maintaining the common areas; also called
association dues
10. form of community ownership where the houses and lots are privately owned but title to common
areas is held by an owner’s association
11. state legislation that creates the legal framework for condominium subdivisions
12. that portion of a condominium that is the exclusive property of an individual owner
13. regulations by which a condominium owner must abide
14. rules for the use of the swimming pool and recreation facilities would be found here
15. a governing body elected by association members
16. a once-a-year business meeting of the entire association membership
17. advises the board of directors; takes care of day-to–day tasks
18. the exclusive use of a property for a specified numbers of days each year
19. a contractual right to occupy a unit at a timeshare resort
20. money set aside from the budget for expenses that do not occur every month
