PLANNED UNIT DEVELOPMENTS


19.1 In General


Where title to real estate purports to be affected by a declaration of covenants, conditions, and restrictions the title examiner must ascertain that the declarant submitting the property was the owner of the property at the time the property was submitted, or that the owner consented in writing to the submission of the property.

19.2 Condominiums - Georgia Condominium Act


(a) Where property has been submitted to a declaration of condominium which creates a condominium under the Georgia Condominium Act, O.C.G.A. Section 44-3-70, et seq. (“GCA”), the examiner must ascertain that the declaration, plats, and plans for the condominium meet the requirements of the GCA.

Comment: O.C.G.A. Section 44-3-77(a) requires that the declaration contain the following as to all condominiums:

a. Name of the condominium including the word “condominium” or “a condominium”;

b. Name of the county or counties in which the condominium is located;

c. A metes and bounds legal description of the submitted property, including horizontal, as well as vertical, boundaries;

d. A description of the boundaries of the unit, including horizontal, as well as vertical, boundaries;

e. A description of any limited common elements designating the unit or units to which they are assigned;

f. A description of all common elements which may be assigned limited common elements;

g. The allocation to each unit of an undivided interest in the common elements, a number of votes in the association, and a share of the liability for common expenses;

h. Limitations or restrictions on the powers of the association or board of directors;

i. Name and address of the person who prepared declaration; and

j. A statement of use restrictions or that there are no such restrictions.

(b) If the condominium is an expandable condominium that is still subject to expansion, then, the examiner must ascertain that the declaration (or the plats or plans) contain the information required by O.C.G.A. Section 44-3-77(b). Comment: O.C.G.A. Section 44-3-77(b) requires that the declaration (or the plats and plans) contain the following information as to an expandable condominium:

a. An option to expand the condominium;

b. A time limit for expansion of the condominium, not to exceed seven (7) years, and a statement of any other circumstances which will terminate the expansion option;

c. Any limitations on the option or that there are no limitations;

d. A legal description by metes and bounds of the additional property, including any horizontal, as well as vertical, boundaries;

e. A statement as to whether portions of the additional property may be added to the condominium at different times, any limitation on the boundaries of the portions setting forth the boundaries of those portions or the order in which the portions may be added, or that there are no limitations;

f. The maximum units to be created on the additional property, on each portion, if applicable, and if boundaries are not fixed for each portion, then the maximum average number of units per acre that may be created on any portion added to the condominium;

g. A statement as to whether any additional units may not be restricted exclusively to residential use, and, if so, the maximum extent of non-residential use;

h. A statement as to the extent to which structures erected on any portion of the additional property added to the condominium will be compatible with structures on the submitted property (quality of construction, principal materials, architectural style) or a statement that no such assurances are made;

i. A description of all other improvements to be made on any portion of the additional property, or any limitations on other improvements, or that no assurances are made;

j. A statement that any units created on the additional property will be substantially identical to the units on the submitted property, or a statement of any limitations as to what types of units may be created, or that no assurances are made;

k. A description of the declarant’s right, if any, to create limited common elements within any portion of the additional property, or to designate common elements that may be subsequently assigned as limited common elements, or a statement that no limitations are placed on that right; and

l. A statement as to a formula, ratio, or other method whereby upon expansion the undivided interests in the common elements, votes in the association, and liability for common expenses are to be reallocated.

(c) If the condominium is an expandable condominium that contains convertible space, it must be ascertained that pursuant to the provisions of O.C.G.A. Section 44-377(c), the declaration contains a statement of a formula, ratio, or other method whereby, upon conversion of all or a portion of the convertible space, there shall be allocated among the units created therefrom the undivided interests in the common elements, the number of votes in the association and the liability for common expenses as previously pertained to such convertible space.

(d) If the condominium is a leasehold condominium, it must be ascertained that the declaration contains the information required by O.C.G.A. Section 44-3-77(d).

Comment: O.C.G.A. Section 44-3-77(d) requires that the declaration contain the following:

a. The county or counties of recordation and deed book and page number for each ground lease, other lease, or other instrument creating an estate for years, the termination of which may terminate or reduce the condominium;

b. The date on which the lease or estate for years will expire;

c. A statement of whether any property will be owned in fee simple by the owners, and, if so, a metes and bounds legal description of such property and a statement of any rights the owners have to remove such improvements at the end of the lease or estate for years, or that they have no such rights;

d. the name and address of the person or persons to whom rent payments must be made by the owners unless such rent is collected as part of the common expenses; and

e. A statement of the share of liability for payments under the lease which are chargeable against each unit.

(e) The title examination must ascertain that prior to the first conveyance of a condominium unit, one or more plats of survey have been prepared in accordance with the requirements of O.C.G.A. Section 44-3-83(a) and have been recorded in the county records.

Comment: O.C.G.A. Section 44-3-83(a) requires the plat of survey to show the following:

a. Location and dimensions of submitted property;

b. Location and dimensions of all structural improvements located on any portion of the submitted property tied down to a fixed locatable point on the boundary line of the property;

c. the intended location and dimensions of all contemplated structural improvements committed to be provided by the declaration on any portion of the submitted property;

d. The location and dimensions of all easements appurtenant to the submitted property or otherwise submitted as common elements;

e. Structural improvements not yet constructed labeled “NOT YET BEGUN;”

f. Leasehold and estate for years portions leased labeled “LEASED LAND;”

g. If non-contiguous parcels, plats are to indicate approximate distances between such parcels (unless disclosed in Declaration);

h. All easements to which any portion of the submitted property is subject;

i. All encroachments by or on any portion of the submitted property;

j. Any portion of vertical boundaries of units lying outside structure as shown on plans must be shown with identifying number of unit;

k. Certificate of compliance with section by a registered land surveyor as follows:

I, _________________, Georgia Registered Land surveyor No. ___ , do hereby certify that this plat is accurate and complies with the provisions of Section 44-3-83(a) of the Georgia Condominium Act.

l. All other items customarily shown or required by law to be shown for land title surveys; and m. A statement on the plat as follows: The condominium declaration for__________ is recorded in Deed Book _____ , Page _____ , of the Superior Court ______ County, Georgia records.

(f) The examiner must ascertain that prior to the first conveyance of a condominium unit one or more plans for the units have been prepared in accordance with the requirements of O.C.G.A. Section 44-3-83(b) and have been recorded in the county records.

Comment: O.C.G.A. Section 44-3-83(b) requires that the plans show the following:

a. Prepared signed and sealed by a registered architect or registered engineer;

b. Plan of every structure which contains or constitutes all or part of a unit which show:

(1) Location and dimensions of exterior walls and the height and location of the roof;

(2) the walls, partitions, floors, and ceilings constituting the horizontal boundaries, if any;

(3) vertical boundaries (including convertible space) to the extent such boundaries lie within or coincide with the boundaries of the structure; and

(4) the identifying numbers of all units.

c. The following certification of the floor plans is required which must be signed and dated by the same engineer or architect;

The undersigned, a registered architect or engineer has visited the site known as ______________ a Condominium and viewed the property and to the best of his (her) knowledge, information, and belief: (i) the exterior walls and roof of each structure are in place as shown on the plans; and (ii) such walls, partitions, floors and ceilings, to the extent shown on said plans, as constitute the horizontal boundaries, if any, and the vertical boundaries of each unit (including convertible pace) have been sufficiently constructed so as to establish clearly the physical boundaries of such unit.

d. Convertible space labeled “CONVERTIBLE SPACE;” and

e. A statement on the plans, as follows: A condominium declaration for _____________ Condominium is recorded in Deed Book _____ , Page ______ of the Superior Court of _____ County, Georgia records.

O.C.G.A. Section 44-3-115 provides that the provisions of the GCA and the condominium instruments are to be construed in favor of the valid establishment of a condominium and that substantial compliance with the requirements for establishing a condominium are sufficient to bring the property described in the condominium instruments within the purview of the Georgia Condominium Act. The examining attorney must analyze any defects in the declaration, plats, or plans for the condominium in order to determine whether, in spite of technical defects, the condominium instruments are sufficient to meet the substantial compliance requirements.

(g) A lien for assessments under the GCA arises automatically, and the recording of the declaration constitutes record notice of the lien; a physical lien is not required. [O.C.G.A. Section 44-3-109(a)].

Comment: The GCA provides that an owner, mortgagee, purchaser under contract, or prospective lender may request a statement from the association or its management agent of all past due assessments, late charges, and interest applicable to a unit. The request must be in writing, delivered to the registered office of the association, and include an address for response. If no response is sent within five business days, the lien is extinguished and no longer effective as to title. The information contained in such a statement is binding on the association. [O.C.G.A. Section 44-3-109(d)]. All assessments owed to the association as of the date of closing must be paid at closing. The owner’s affidavit signed by the seller at closing should contain a statement that all assessments owed to the association are paid in full.

(h) Any right of first refusal or other restraint on the free alienability of condominium units under the GCA requires that the condominium instruments make provision for furnishing, upon request, to a unit owner or person who has executed a contract for the purchase of a unit a recordable statement certifying any waiver or refusal to exercise such rights whenever such waiver or failure has occurred. Failure or refusal to furnish such a statement within 30 days or such lesser period provided in the condominium instruments renders the rights or restraint inapplicable to that unit. [O.C.G.A. Section 443-110]. Comment: As in any other transaction involving a right of first refusal or restraint on alienation, it is recommended that a release of such rights be recorded simultaneously with the warranty deed.

(i) A legal description of a unit submitted to the GCA is sufficient if it sets forth the number of the unit, the name of the condominium, the county or counties in which the condominium is located, and the deed book and page number where the first page of the declaration is recorded. [O.C.G.A. Section 44-3-73].

(j) An examiner should consider the provision of O.C.G.A. Section 44-3-95(a), (b), (c) and (d) when evaluating the applicability and relative position of liens for labor or services performed or materials furnished recorded upon the submitted property as follows:

I. Liens for labor or services performed or for materials furnished in the improvement of property (either before or after it becomes submitted property) recorded upon the submitted property as a whole after the recordation of the declaration are subordinate to the declaration. [O.C.G.A. Section 44-3-95(a)].

II. Liens for labor or services performed, and for materials furnished for the improvement of property (either before or after it becomes submitted property), either performed or used in the original construction of any portion of a condominium, or additional property of an expandable condominium may be recorded against the property as a whole; however, such a lien is valid only as to units which have not been conveyed by the declarant to a person in a bona fide sale and purchase transaction prior to the recording of the lien. Such a lien is inapplicable and unenforceable as to units so conveyed. [O.C.G.A. Section 44-3-95(b)].

III. After the condominium is created, no lien shall arise or be effective against the submitted property as a whole (except as provided in II above). Liens or encumbrances shall arise or be created or effective only against each condominium unit in the same manner and in the same condition as against any other separate parcel of real property. However, labor or services performed or materials furnished for improvement of the common elements, if authorized by the association (subject to other provisions of law), creates a lien against all of the condominium units. Any unit owner may have such a lien removed from his or her condominium unit and released of record by payment of the amount attributable to the unit (based on its liability for common expenses) [O.C.G.A. Section 44-3-95(c) and (d)].

19.3 Condominiums - Apartment Ownership Act


(a) Some condominiums created prior to October 1, 1975 are still governed by the Apartment Ownership Act, Chapter 85-16(b) of the Code of Georgia of 1933 (“AOA”). Where property is submitted to the AOA, it must be ascertained that the declaration and plans meet the requirements of the AOA.

Comment: The AOA in Section 85-1602b requires that a declaration be executed and recorded which contains the following:

a. Description of the land and whether is leased or fee simple;

b. Description of the building (number of stories and basements, number of units, and principal materials);

c. Number of each unit and statement of its location, approximate area, number of rooms, and immediate common area to which it has access;

d. Description of the common areas and facilities, stating to which units their use is reserved;

e. Value of the property and each apartment and the percentage of undivided interests in the common area an facilities appertaining to each apartment;

f. Statement of the purposes for which the building and each unit are intended and restricted;

g. Name of person to receive service of process and the residence or place of business for such person which must be within the city or county in which the building is located;

h. Percentage of votes necessary in order to determine whether to rebuild, repair, restore, or sell the property in the event of damage or destruction of all or a part of the property; and

i. Method for amending the declaration.

Simultaneously with the recording of the declaration, floor plans were required to be recorded showing the layout, location, apartment numbers and dimensions of units, stating the name of the building and bearing a verified statement by an architect or engineer certifying that it is an accurate copy of the plans approved by the city or county; or prior to the first conveyance of a unit an amendment to the declaration must be filed containing a verified statement of a registered architect or licensed professional engineer certifying that the plans accurately depict the layout, location, apartment numbers and dimensions of the unit, as built. [Code of Georgia of 1933, Section 85-1612b].

(b) In the examination of property subject to the AOA, the examiner should refer to the following provisions as to assessments:

I. A lien for assessments under the AOA does not arise automatically and the recording of a physical lien in the county records is required. AOA condominium liens are superior to all other liens except: (i) liens for ad valorem taxes on the unit; (ii) the lien of any first priority mortgage covering the unit; (iii) rental due under lease of the property to which the declaration is subject. [Code of Georgia of 1933, Section 85-1621b(a)].

II. The AOA provides that a purchaser of a unit is entitled to a statement from the manager or board of directors setting forth the unpaid assessments against the grantor and unit, and the purchaser is not liable for and the unit is not subject to liens for any amounts in excess of those set forth in the statement. [Code of Georgia of 1933, Section 85-1622b].

Comment: Good practice requires that the closing attorney should request and obtain a statement from the association as to all past due assessments owed on the unit in order to insure that the new owner is not subject to liability for unpaid assessments, and to avoid the possibility of a lien being filed by the association during the “gap” period. The owner’s affidavit signed by the seller at closing should contain a statement that all assessments owned to the association have been paid in full.

(c) Legal descriptions of units contained in deeds are required to include a description of the land of the condominium or its post office address, the deed book, page and date of the recording of the declaration, the unit number, the use of the unit and any restrictions on use, and the undivided percentage interest in the common areas appertaining to the unit. [Code of Georgia of 1933, Section 85-1611b].

(d) The following provisions of Section 85-1608b(a) and (b) of the Code of Georgia of 1933 as to liens should be considered in the examination: After the condominium is created, no lien shall arise or be effective against the submitted property as a whole. Liens or encumbrances shall arise or be created or effective only against each condominium unit in the same manner and in the same condition as against any other separate parcel of real property. However, labor or services performed or materials furnished for improvement of the common areas, if authorized by the association, subject to other provisions of law, creates a special lien against all of the condominium units. Any unit owner may have such a lien removed from his or her condominium unit and released of record by payment of the amount attributable to the unit (based on its liability for common expenses) or by filing a bond.

19.4 Time-Share Estates


(a) Where property has been submitted to the Georgia Time-Share Act, O.C.G.A. Section 44-3-160, et seq., (“TSA”), it must be ascertained that the project instruments for the development in which the property is located do not prohibit a timeshare program. [O.C.G.A. Section 44-3-165(a)].

Comment: TSA provides that a time-share estate is an estate in real property with the characteristics of an estate in fee simple at common law or an estate for years, if a leasehold. [O.C.G.A. Section 44-3-163(a)]

(b) The examination of title must ascertain that the project instruments and time-share instruments creating the time-share estates are recorded in the county in which the project is located and contain the information required by O.C.G.A. Section 44-3-166.

Comment: O.C.G.A. Section 44-3-166 require that the project instruments and timeshare instruments contain:

a. Name of the county in which the property is located;

b. The legal description, street address, or other description sufficient to identify the property;

c. Identification of time periods by letter, name, number or combination thereof;

d. Identification of time-share estates and, where applicable, the method whereby additional time-share estates may be created;

e. The formula, fraction, or percentage of the common expenses and any voting rights assigned to each time-share estate and, where applicable, to each unit in a project that is not subject to the time-share program;

f. Any restrictions on the use, occupancy, alteration, or alienation of time-share intervals; and g. The ownership interest, if any, in personal property and provisions for care and replacement.

19.5 Property Owners’ Association — Not Subject to Statute


Where title to real estate is affected by a declaration of covenants, conditions, and restrictions, all conveyances which occur after such covenants are of record must meet the requirements of the recorded declaration and bylaws (if recorded), and any liens for assessments recorded by the association must be paid in full and satisfied at closing.

Comment: Good practice requires that, if covenants create a mandatory membership homeowners association, the closing attorney should request and obtain a statement from the homeowners association as to all past due assessments owed on the lot in order to insure that the new owner is not subject to liability for unpaid assessments, and to avoid the possibility of a lien being filed by the association during the “gap” period. The owners affidavit signed by the seller at closing should contain a statement that all assessments owed to the association have been paid in full.

19.6 Property Owners Associations — Georgia Property Owners’ Association Act


(a) Where property has been submitted to the Georgia Property Owners’ Association Act, O.C.G.A. Section 44-3-220, et seq. (“POA”), it must be ascertained that the declaration or an amendment to the declaration meets the requirements of the POA. The property owners association must be incorporated and the corporate name must include the word or words “homeowners,” “property owners,” or “association,” [O.C.G.A. Section 44-3-227]. In addition, the association of owners must be subject to a recorded declaration of covenants upon property, which covenants are administered by a mandatory membership association. [O.C.G.A. Section 44-3-235(a)].

(b) The following provisions of POA pertaining to assessments should be referred to wherever property is subject to POA:

I. Grantees of Property in the association are jointly and severally liable with the grantor for unpaid assessments levied against the property up to the time of the conveyance; however, a holder of a first or secondary purchase money mortgage of record (other than a previous owner) or any other person who acquires title to a condominium unit as a result of foreclosure of a first or secondary purchase money mortgage (other than a previous owner) is not liable for any assessment chargeable to the unit prior to the acquisition of title. [O.C.G.A. Sections 44-3-225(c) and (d)].

II. A lien for assessments under the POA arises automatically, and the recording of the declaration constitutes record notice of the lien; a physical lien is not required. Association liens are superior to all other liens except: (i) liens for ad valorem taxes on the unit; (ii) the lien of any first priority mortgage covering the unit and of any mortgage filed prior to the recording of the declaration; and (iii) the lien of any secondary purchase money mortgage covering the unit unless the grantee or successor grantee on the mortgage is the seller of the unit. [O.C.G.A. Section 44-3-232(a)].

III. The POA provides that an owner, mortgagee, purchaser under contract, or prospective lender may request a statement from the association or its management agent of all past due assessments, late charges, and interest applicable to a lot. The request must be in writing, delivered to the registered office of the association, and include an address for response. If no response is sent within five business days, the lien is extinguished and no longer effective as to title. The information contained in such a statement is binding on the association. [O.C.G.A. Section 44-3-232(d)].

Comment: The closing attorney must obtain from the association a statement of all assessments owed to the condominium association as of the date of closing must be paid at closing. The owner’s affidavit signed by the seller at closing should contain a statement that all assessments owed to the association are paid in full. The effective date of POA is July 1, 1994.