Common Interest Developments

Common-interest ownership consists of a parcel of land together with all the buildings and improvements (e.g. homes, recreational facilities, and common area improvements) that have been constructed upon that land. While there are many different ways of dividing the ownership, common-interest subdivisions generally include:

1. Individual ownership of an interest, unit, housing lot or space.
2. Ownership in common with others in the recreational facilities and green belts.
3. Some form of an association to collect proportionate shares of the common-interest’s expenses, and to disburse the same for upkeep, reserves and services rendered.

We all work with the major forms of common-interest ownership every day. Planned unit developments (PUDs), which combine individual lot ownership with areas owned in common with the other lot owners. Normally these are recreational facilities and private streets. The condominium is another major form of common-interest ownership. A condominium is an estate in real property in which one holds a separate fee title to the airspace in a unit and an undivided interest in common with the other owners to the common areas.

Now for the “uncommon” common-interest ownership.

The community apartment (own-your-own) is a variation of common ownership. In this type of project, the buyer receives an undivided interest in the entire project (the land or leasehold estate and the buildings) and the right to occupy a particular unit. The right to occupy is like an easement giving the owner the exclusive right to use/occupy a particular unit. In addition, the owner has the non-exclusive right to use the common areas and facilities.

The cooperative is a variation of the community apartment. In a cooperative the fee title/leasehold interest and improvements are generally owned by a non-profit corporation. The individual owns stock in the corporation, which entitles the owner to occupy or often times lease, a particular unit from the corporation. The owner also has voting power to help govern the operation of the cooperative. There are two types of loans provided to cooperatives. The underlying or blanket loan encumbers the real estate and/or the improvements. A share loan encumbers the share of stock and the lease or occupancy agreement between the cooperative and the individual shareholder. It should be noted that under California Civil Code 783.1 the shareholder’s stock cooperative interest along with the corporation’s interest in the land and improvements are considered real property.

We at Maritime Mortgage have been providing financing for cooperatives, their shareholders and individual owners of own-your-owns for the past 17 years. Our blanket loans are now available to most “common-interest subdivisions” in both first and second position.