Question: Over the last few years a number of units in our condominium association have been purchased by “LLCs” or other fictitious entities, such as corporations.  Typically, these entities have multiple directors or members and we never know who is using the unit or who even has the right to do so.  Is there something the association can do to prevent this?  M.M. (via e-mail)
Answer: Maybe. The issue you raise is one we have seen more frequently since the real estate downturn over the last few years.  Due to the drop in real estate prices, many investor groups come in and purchase units.  Often these properties are owned by some type of fictitious entity, such as a limited liability company (LLC), corporation or partnership.  Because these properties are not owned by a specific individual, but by some corporation or company, it can be difficult to know who has the right to occupy the unit.
The first step is for the association to understand what limitations are contained in its declaration on unit ownership and occupancy.  Some declarations of condominium restrict ownership of units to natural persons, and prohibit the ownership of units by corporations or LLCs.  However, the more common solution is to require that all unit owners, including corporations and LLCs, declare who is the “primary occupant.”  By doing so, regardless of how a unit is owned, the association knows which individual is to be considered the “unit owner” of a particular unit.  When a unit is owned by an individual, or a husband and wife, the question is easily answered.  However, if a unit is owned by a corporation or LLC, the declaration can require that the unit owner, the corporation or LLC, name a “primary occupant.”  This would be the individual considered the unit owner by the association.  This prevents the problem where multiple LLC members claim to be a unit owner and use the condominium in a way that is inconsistent with the community, such as a short-term vacation rental.  However, these restrictions would need to be contained in the declaration and, if they are not in your declaration, an amendment is likely required.  The association should consult with its legal counsel to determine what restrictions are contained in its declaration and if an amendment is necessary.