Did the condo come with parking spaces or not?

Diane,

We bought a condo unit that has had two indoor parking spaces since this building went condo in 1985. This unit was a REO foreclosure by the VA and was subsequently listed for sale by a local agent. The MLS listing showed the two spaces clearly identified. After our cash offer was accepted and we got the various forms to review and sign, we noticed that there was no mention of the parking spaces and we and our agent questioned the selling agent, and the title company that the seller has selected to handle the closing, several times about the lack of this inclusion. They kept assuring us that there was no problem. We went to closing prepared to refuse to close unless it was resolved.

> The closing attorney went to great pains to tell us that everything was above board and that detailing the specific parking spaces was not done anymore on the deed as they could be bought and sold outside of the unit itself. He said as long as the deed had the statement “including limited common elements” then we were protected. So reluctantly we went through with the closing, signing the various pages that required signatures. He then made copies, assembled the various documents with the signature pages and gave us the whole package in a folder. He had a copy of the deed from the previous foreclosed owner that he also gave us. I know the proper thing to do was to just walk away from it until things were resolved but relied on his objective statements that it was done properly. A number of warning flags should have caused me to be suspicious, especially when he did not go over every document in detail before having us sign it. Evidently, he felt that the subject had been already discussed in detail so there was no need to go over the deed.

Once we got away from there and I reviewed the deed, I saw that there was no mention of “including limited common elements” at all. I saw a number of items of concern on the deed. The preparing attorneys stated that they did no title search nor made any representation about the accuracy of the legal description, as well as the legal description omissions. I determined to do my own title search and went to the Alexandria VA courthouse and tracked each deed for this unit. Every deed back to the original condominium document assigning indoor parking spaces to specific units had the appropriate comment  “…, including limited common element parking spaces 96 and 97, established by Condominium Instruments…” in the legal description, except one. To my surprise, and which had been omitted from discussion at the closing, there was another deed between the deed of the foreclosed owner and mine, which I should have known if I had thought about it. When the VA foreclosed there was a Trustee’s Deed prepared that made no mention of the “including limited common elements”. I can only assume that the attorneys that prepared the deed that we got at closing used the Trustee’s Deed from which to copy the legal description.

Now if I can find this with a little looking at the courthouse then anyone doing a title search before issuing owners title insurance would have easily seen the difference and taken corrective action, or so it seems to me. There is no indication that a title search was made, or if it was done, was done incorrectly.

I relayed this problem to the management office of the condo assn. and they sent me a strongly worded letter stating that since I cannot prove ownership of the two spaces, I am prohibited from using them and they will keep watch that I don’t disregard their letter. I have copies of the previous deeds, the letter from the condo, the title insurance, the HUD-1, and am going to write a letter to the titling companies, the VA, the selling agent, and anyone else that might have an interest in this situation.

That is my story, do you have any concerns that I should be aware of, or strategy to follow?

D

Hi, D.  First,please be aware that I am not an attorney and am not offering legal advice. To be certain you are covering all bases, I would suggest hiring an attorney to straighten out this mess.

That said, the first thing I would do is to look at the title insurance policy if you have received it. It may take up to 60 days after closing to get the policy.  If you don't yet have the policy, look at the title insurance commitment.  You should have received this prior to closing so you would have a chance to review what property was to be insured and what the exceptions are.  If you did not receive a title insurance commitment prior to closing, report this to your state insurance department.

If you have either the policy or commitment in hand look for the page that describes the property.  It might be called Schedule C.  The legal description should identify the condo unit and typically would also make note of common elements included with the unit.  If you see common elements listed there then the title insurance company has insured that whatever is described there is part of what you own.

I would also get a copy of the Declaration of Condominium.  Look to see how your unit is described in the Declaration.  There may be a specific reference to the common elements assigned to your unit.

Don't get hung up yet on the condo association comments because in my experience very few condo managers or officers actually have read or understand the condo documents.  You need to read them yourself and either on your own or with the help of an attorney get them to understand what common elements go with your unit.

Don't get hung up on what deeds say.  If the Declaration says that each unit gets two parking spaces, then you get them even if it's not in your deed. Every deed does not have to specify all information that is already on record at the courthouse.  For instance, if you buy a house in a plan, the plan says there are roads. Your deed doesn't have to describe the roads, they are already described on the plan document.  As long as the deed describes the correct unit and the correct condominium, then whatever the Declaration says you get, you get.

Now, it is entirely possible that the REO people who marketed the property had incorrect information about parking spaces.  If that is the case, when you look at the Declaration, you will find that you don't get parking.  Perhaps it is sold separately.  In that case, your attorney will help you sort out who did what wrong and how it can be fixed.

The key to everything is reading the Declaration document - including any revisions or amendments.

Good luck and I would like you to report back to let me know if the parking was in the Declaration.  I'm kinda curious!

Diane

query: the cost of title insurance on a condo

In PA the cost for title insurance on a condominium is not different than title insurance on any other piece of real estate. If you are getting a mortgage, your mortgage lender may want a condominium endorsement added to the loan policy. If so, the cost for the endorsement is $50.

BTW - Though I've never had a consumer ask for this extra coverage, the endorsement is available as an addition to an owner policy for a cost of $50, too. It's PA 810 which if the PA equivalent to the ALTA 4.-06 endorsement.

Here's what is says:

The Company insures against loss or damage sustained by the Insured by reason of:

1. The failure of the unit identified in Schedule A and its common elements to be part of a condominium within the meaning of the condominium statutes of the jurisdiction in which the unit and its common elements are located.
2. The failure of the documents required by the condominium statutes to comply with the requirements of the statutes to the extent that such failure affects the Title to the unit and its common elements.
3. Present violations of any restrictive covenants that restrict the use of the unit and its common elements and that are contained in the condominium documents. The restrictive covenants do not contain any provisions that will cause a forfeiture or reversion of the Title. As used in this paragraph 3, the words "restrictive covenants" do not refer to or include any covenant, condition, or restrictions (a) relating to obligations of any type to perform maintenance, repair, or remediation on the Land, or (b) pertaining to environmental protection of any kind or nature, including hazardous or toxic matters, conditions, or substances, except to the extent that a notice of violation or alleged violation affecting the Land has been recorded in the Public Records at Date of Policy and is not excepted in Schedule B.
4. Any charges or assessments provided for in the condominium statutes and condominium documents due and unpaid at Date of Policy.
5. The failure of the unit and its common elements to be entitled by law to be assessed for real property taxes as a separate parcel.
6. Any obligation to remove any improvements that exist at Date of Policy because of any present encroachments or because of any future unintentional encroachment of the common elements upon any unit or of any unit upon the common elements or another unit.
7. The failure of the Title by reason of a right of first refusal to purchase the unit and its common elements which was exercised or could have been exercised at Date of Policy.

This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.

what is a townhouse?

Anyone who has ever worked with me has gone through this training session over and over again. I guarantee that they are chuckling if they are reading this post.

Why do we go over this subject so often? Because there's some sort of built-in automatic misconception that's really hard to cure. People make assumptions about the form of ownership based on their past experience with townhouses. That kind of an assumption may cause you to go down the wrong path when setting up a title file.

A townshouse is nothing more than an attached dwelling. It's an architectural style and the style does not denote any form of ownership.

When I ask the question, what's a townshouse, I am really leading into a discussion about condominiums and planned unit developments (PUDs).

So, picture a row of five beautiful townshouses. What different forms of ownership can we consider? It may simply be a single family dwelling with no connection in ownership other than party wall rights or there may be a more complex connection requiring further documentation.

First, determine if the land underneath the home is being sold as a lot. If you are buying a specific lot, even if the lot only sits under the walls of the home, you are NOT buying a condominium. The townshouse is a single family attached dwelling that may or may not sit in a PUD.

How do we determine if the plan is a PUD? Is there a MANDATORY membership in a homeowner association (HOA)? If yes, it's a PUD. If no, it's not a PUD.

A townshouse may be a condominium. If so, the deed will identify the home as a unit in a plan that has been declared a condominium. The declaration will be on record. The land is owned jointly by the condominium association and the unit owner has a percentage ownship in the land and other common elements.

So, a townshouse is simply an architectural style and though knowing that is a red flag prompting us to dig deeper, the fact that it's a townhouse alone does not determine the form of ownership.

[As an aside, beware the hybrid. Some attorneys failing to understand the difference between a condominium and PUD prepare deeds that lead you to believe you are working with a condo when in fact it's a PUD and visa versa.]