Is Your Community Association A Condominium Or A Planned Community?

In Arizona, the vast majority of community associations are formed as either Condominiums, which are subject to the Arizona Condominium Act (A.R.S. Section 33-1201, et seq.); or, Planned Communities, which are subject to the Arizona Planned Communities Act (A.R.S. Section 33-1801, et seq.).  In many communities, the distinction is clear. However, there are some cases where the classification of Condominium v. Planned Community is less obvious (e.g. townhouses).

Pursuant to ARS Section 33-1202(10) of the Condominium Act,

“Condominium” means real estate, portions of which are designated for separate ownership and the remainder of which is designated for common ownership solely by the owners of the separate portions. Real estate is not a condominium unless the undivided interests in the common elements are vested in the unit owners.

Pursuant to ARS Section 33-1802(4) of the Planned Communities Act,

“Planned community” means a real estate development that includes real estate owned and operated by or real estate on which an easement to maintain roadways or a covenant to maintain roadways is held by a nonprofit corporation or unincorporated association of owners, that is created for the purpose of managing, maintaining or improving the property and in which the owners of separately owned lots, parcels or units are mandatory members and are required to pay assessments to the association for these purposes. Planned community does not include a timeshare plan or a timeshare association that is governed by chapter 20 of this title or a condominium that is governed by chapter 9 of this title.

As such, the primary difference between a Condominium and a Planned Community is the ownership of the common elements.  In a Condominium, the Owners typically own an undivided interest in the common elements and such ownership is reflected in the Declaration and on each Deed.  In a Planned Community, the Association typically owns the common elements (or has an easement or covenant to maintain roadways).

While the Condominium Act and Planned Communities Act have many similar provisions, there are also important differences that could potentially impact your community.  If you are unsure whether your community association is considered a Condominium or Planned Community, pursuant to Arizona law, please contact Mulcahy Law Firm, P.C.