Most homeowners are aware of whether or not they live in a homeowners’ association. But, oftentimes, business owners are surprised to learn that their properties are included within a commercial owners’ association. Commercial owners’ associations are nonprofit corporations that govern certain communities, developments, and business centers, in which the properties and/or units are owned and used for non-residential purposes.
Although many of the obligations and responsibilities of owners in commercial associations are similar to those in homeowners’ associations, there are several unique issues that arise in commercial associations. These include the following:
1. Use Restrictions
The governing documents and declaration establishing a residential community will promote “typical” neighborhood, i.e., non-commercial, activities and will restrict or ban activities that may create a nuisance to others within a residential community. Use restrictions in commercial communities are also drafted to prevent business owners from becoming a nuisance to other owners. Similarly, use restrictions for commercial communities typically establish and identify the specific uses that are permitted within a business community. By way of example, some commercial developments are restricted to medical offices, retail, or restaurants, or a combination of these uses. It is very important that commercial owners and tenants are aware of any use restrictions, so that they do not inadvertently enter into a lease or other agreement that constitutes a prohibited use.
Other than “for sale” signs, the use of signs is usually prohibited in residential communities. But, in commercial communities, use of signage is usually specifically addressed and very necessary to identify businesses within a particular commercial community. Common limitations for business signs include size, number, font, and the “types” of signs (e.g., monument signs, electronic signs,etc.) that are allowed in a commercial community. Governing documents usually address how signs are managed, maintained, and modified by the association or by owners. It is imperative that business owners know the types of signs they are permitted to have before signing a lease or purchasing a building governed by an association.
In most situations, parking is not an issue with homeowners’ associations. Owners park their vehicles in dedicated spaces, driveways, or areas that are specifically designated as parking zones. In commercial associations, however, parking is often critical to business owners. Convenient parking is important for employees, clients, and customers and is vital to the success of a business. The issue of adequate parking should be addressed in all commercial declarations and review and considered by anyone wanting to lease or own in a commercial community.
4. Compliance with Laws
In homeowners’ associations, all of the lots and properties are being utilized for the same general purposes. As a result, laws, zoning ordinances, and other regulations are usually easy to understand, as they are applicable to each owner in the same fashion.
In commercial associations, however, properties are not being utilized for the same purpose and differing laws may apply. For example, restaurants and medical offices and other uses are oftentimes subject to different laws and regulations. Under most commercial owners’ association documents, the burden to comply with the ordinances and regulations falls on individual business owners and, therefore, business owners should be aware of ordinances and regulations applicable to their commercial community. Violating an ordinance could leave business owners subject to liability to both the commercial owners association and the local government.
These are just four of the key considerations for those purchasing, leasing, or owning within a commercial owners’ association. For a complete list of considerations, feel free to email me at email@example.com or call 602-533-2840.
Patrick R. MacQueen is a founder of MacQueen & Gottlieb, PLC.