One of the primary differences between a condominium and homeowners' association relates to the ownership of common elements.  In a condominium association, the unit owners each own an undivided interest in the common element property.  Accordingly, there is not a separate deed conveying the common element property to the condominium association.  In a condominium association when the developer conveys a unit to a buyer, the developer is also conveying an interest in the common element property to each unit owner in conjunction with the deed to the unit.  However, in a homeowners' association, the association owns the common elements.  Accordingly, the developer of a homeowners' association must separately convey the common elements to the association.  Therefore, separate deeds for the common element property from the developer to the homeowners' association must be prepared and recorded.

It is important to determine whether the common elements and open space in your community have been conveyed to your association.  Fox example, when overlooked, issues may arise with respect to the taxation of common element property.  Common element property is taxed in a homeowners' association by including the interest of each unit owner in the common element property (by virtue of their membership in the association) as part of the determination of the assessed value of each unit.  We have encountered separate tax bills for common element property in various communities as a result of the failure of the developer to properly convey the common element property to the homeowners' association.

The conveyance of common elements and open space to the homeowners' association typically takes place during your community's transition process from the developer to the unit owner controlled homeowners' association.  A review of the final recorded development plans, tax records and recorder of deeds records is necessary to determine whether the developer has properly conveyed the appropriate real estate parcels to the association as required under the association's governing documents.

Our firm has extensive experience in providing associations with the information they need to successfully navigate through the transition process.  Our involvement in the transition process generally includes working directly with the Board of Directors or its duly designated transition committee, the association's engineers, accountants and the local municipality to complete the transition process and to protect the association's rights with respect to any potential claims in this regard.

If you have any questions or concerns in connection with the association's ownership of its common elements or transition in general, please feel free to contact us.

The distinction between employee and independent contractor can be hazy, however, misclassification can have serious consequences.  As part of the stepped up enforcement of workplace laws, the U.S. Department of Labor plans to hire 100 additional investigators to target employers who misclassify employees as independent contractors.  Misclassifying employees as independent contractors can be costly with the employer being potentially liable for unpaid employer taxes as well as a portion of both the income tax that should have been taken from each employee's paycheck and the employee's share of Social Security taxes and Medicare taxes.  Misclassifying employees as independent contractors can also violate other laws such as the Fair Labor Standards Act's minimum wage and overtime requirements.

Many community associations classify maintenance personnel and other workers who do various jobs for the Association as "independent contractors" to avoid withholding federal income tax and dealing with unemployment, workers' compensation and other employment issues.  Associations are normally under the belief that simply classifying an individual as an "independent contractor" insulates them from any potential liability.  However, simply calling someone an "independent contractor" doesn't mean they are, in fact, an independent contractor. Many other factors must be analyzed.

Generally, employees are subject to their employer's right to control how, when and where they perform their work.  Independent contractors are not subject to control over the manner in which they deliver services.  More specifically, the IRS considers factors in three categories, including:

1.      Behavioral Control - If an employer trains and directs work, including hours of work, tools and equipment to be used and how the work is to be completed, the worker is likely an employee.

2.      Financial Control - This factor includes how the worker is paid, whether the worker may work for others at the same time and whether the worker can incur a profit or loss.

3.      Type of Relationship - A contract that states that a worker is an independent contractor is not enough to determine the work relationship.  If a worker provides services that are a key aspect to the business and his work is presented as that of the employer, the worker is more than likely to be considered an employee.

Within these three categories, you must look at the following criteria to determine employee or independent contractor status:

The existence and specific terms of a contract.

When and where the work is performed.

Who owns the tools and equipment that are used? 

What degree of instruction is given to perform tasks?

Is the worker subject to a performance evaluation system?

Is training provided to the worker?

Are expenses reimbursed?

Is the worker permitted to provide services to others?

What is the method of calculating payments to the worker?

Classifying workers can be challenging. We encourage you to discuss this issue with legal counsel in order to avoid potentially expensive disputes.