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CONDOMINUMS -  Condo Bylaws
    A unit owner in a condominium owns a fractional interest in the common elements, as explained above.  The sum of the fractional interests of all the unit owners in the regime is 100%.

    The legal relation between the unit owners is that of “concurrent” ownership of the common elements.  Concurrent ownership simply means you and the others own the same property at the same time. The legal name for such concurrent ownership is “as tenants in common.”  Legally this also means that each one of the unit owners has the use of the undivided whole or all of the common elements. For this reason, it is necessary in the Declaration to provide for “limited” common elements when necessary to prevent all owners from access, for example, to a porch.  Any common element, like the driveway, that is not a limited common element is a general common element, open for all to use.

    Because of the ongoing legal relationship of the co-owners, the condominium statute requires that annexed to the Declaration is a document known as the bylaws.  Section 499B.15 of the Code of Iowa sets out six numbered paragraphs containing about a dozen particular requirements that are the minimum requirements of the bylaws of the regime.   The first sentence of 499B.15 says that the bylaws must provide for the form of administration and specifying the powers and manner of removal of the body that will be in charge of such administration.  The second sentence says these bylaws must provide for the method of calling or summoning the co-owners to assemble, the percentage necessary for a quorum, who presides over meetings and who keeps the minute book “wherein resolutions shall be recorded.”

    In short, that section does not require that the form of organization be a corporation.

    If a group of people regularly meet and adopt bylaws, you have an unincorporated association.  There is a lot of law about unincorporated associations.  One question is whether or not it can be sued in its association name.  There are some landmark cases on this.  One is Boyer v. Iowa High School Athletic Association, 258 Iowa 285, 138 N.W.2d 914 (1965).  In Boyer the court said, “… an association may be sued by its common name with joinder as parties defendant of one or more of those identified with organization who are representative of the class.”  To me that means a plaintiff could sue the home owners’ association (HOA) and join just one of the directors as representative of the other owners.

    Because of the questions presented by having an unincorporated homeowners association I have always advised my clients to use a non-profit corporation for the HOA.  This in turn introduces the question of whether to have two sets of bylaws.

    Section 504A.12 of the Code contains minimum requirements of the corporate bylaws of an Iowa not-for-profit corporation.  Section 504A.11 provides that a not-for profit can have one or more classes of members.  (Members are to a non-profit what shareholders are to a for-profit.)  504A.12 says the power to alter or amend the bylaws is vested in the directors unless otherwise provided in the Articles of Incorporation.

     I provide in my Declaration that the administration is governed by the attached bylaws.  Then the bylaws that I attach provide all of the items required by 499B.15 and also all of the items required by 504A.12.  Then in my Articles of Incorporation I provide that the Board of Directors shall adopt the bylaws of the regime that are required by 499B.14 to be annexed to the Declaration under 499B.3.

    In this fashion I provide for a regular non-profit corporation to function as the form of organization of the HOA; and I make it clear that the corporate bylaws and the regime bylaws are the same instrument.  In this way the corporation can purchase liability insurance and you have a legal entity that can sue or be sued if that ever becomes necessary.  That entity can also agree to indemnify individual unit owners in certain circumstances, again depending on how it is set up.  I usually include provision concerning the limits of the Directors’ liability and for indemnifying present or former directors, officers, employees, members and volunteers in the Articles for the non-profit corporation.

This page was written on 04190.

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