The owner of a Unit in the Condominium ("Unit Owner") holds an interest consisting of two distinct but inseparable interests in real property. One is the sole ownership in fee simple of the Unit itself, and the other is the ownership of the Common Elements in common with all of the other Unit owners.
A Unit generally consists of the space bounded by an imaginary plane along and coincident with the innermost surface of the ceiling joists of a dwelling, an imaginary plane along and coincident with the innermost surface of the floor joists of a Unit and an imaginary plane along and coincident with the innermost surfaces of the studding of the perimeter walls of the dwelling. A more specific delineation of a Unit is set forth in Article III of the proposed Master Deed. Although the Master Deed and By-Laws subject the Unit Owner to certain restrictions on the use of his Unit, he is entitled to the sole possession of his Unit and may generally decorate its interior as he chooses. In addition, a Unit Owner must maintain the Unit's interior as well its doors and windows, and must pay the cost of any utilities that are individually metered and utilized for his Unit.
A Unit Owner also owns an undivided proportionate interest in the Common Elements, which include but are not limited to such things as the parking areas, all the land within the Condominium, any recreational amenities constructed on the Property, the undeveloped land within the Condominium, roadways, footings, and any Units, equipment, furniture or other property which is owned or acquired by the Association.
Under Article IV of the Master Deed, the Common Elements are separated into three categories. General Common Elements can be broadly described as those which are for the use and benefit of all of the Units, and Limited Common Elements can be broadly described as those which are for the use and benefit of certain Units to the exclusion of the other Units, such as exterior stairways and landings, porches and patios. The third Category, Reserved Common Elements, includes portions of the General Common Elements that the Association may designate for the use and enjoyment of one or more Unit owners to the exclusion of other Unit Owners on a short term basis. At its option, the Association may set a fee for the use of these Reserved Common Elements which will be payable by the Unit Owner receiving the benefit of the designated facility. The Master Deed provides, as to reserved Common Elements, that a Common Element may not be designated solely for the use of a Non-Unit Owner. The Developer recommends that each prospective purchaser consult Article IV of the Master Deed for a more complete treatment of the Common Elements. All Unit Owners have access to the General Common Elements, while access to the Limited Common Elements and Reserved Common Elements is restricted to certain Unit Owners.
The interest of each Unit Owner in the Common Elements will be established by the Developer and will be expressed as a percentage of the whole. Thus, the aggregate percentage interests of all Units incorporated within the Condominium will equal one hundred percent (100%).
The Developer has established the proportionate interest in the Common Elements attributable to each Unit in the Condominium. The proportionate interest of each Unit is determined according to the square footage of each Unit relative to the total square footage of all Units in the aggregate. The proportionate interest is expressed as a percentage of the whole as set forth in Exhibit F to the proposed Master Deed. The proportionate interest of the Unit Owner in the Common Elements is used to allocate among the Unit Owners the casualty insurance proceeds paid for any damage to the Common Elements, as well as those resulting from any condemnation or other disposition of the Common Elements. It will also determine each Unit Owner's proportionate share of the Common Expenses. The Common Expenses are discussed in more detail in Section 6 of this Public Offering Statement.
The rights and obligations associated with condominium ownership are similar to the rights and obligations associated with the ownership of other real property. A Unit can be mortgaged, provided that the mortgage loan is procured from a bank, insurance company, savings and loan association or other recognized institutional lender. A default under a mortgage encumbering any particular Unit does not affect the other Units, except to the extent that all Unit Owners may be required to contribute to assessments which are intended to compensate for delinquent and unpaid Common Expense assessments. In addition, a Unit Owner is permitted to lease his Unit, although Article X of the Master Deed imposes certain restrictions and requires a lease to be for a minimum term of six (6)months; Owners of Affordable Housing Units, as hereinafter defined, are not permitted to lease their Units. A Unit Owner must also pay the real estate taxes assessed against his Unit. Any Unit Owner's failure to pay the real estate taxes due on his Unit does not make the remaining Unit Owners liable for those unpaid taxes.
Based on the federal Tax Reform Act of 1986 (the "Act"), as fame exists as of the date of this Public Offering Statement, each individual Unit Owner who resides in his Unit and itemizes his deductions on his federal income tax return should be entitled to deduct from his gross income for federal income tax purposes the real property taxes assessed against his Unit and the interest paid by him on any mortgage indebtedness encumbering his Unit. However, the interest deduction is not allowed for any interest attributable to any debt which exceeds the market value of this Unit, or the purchase price of the Unit plus the costs of any improvements, whichever is less. In such event, interest on that portion of the debt that exceeds the market value or purchase price plus improvements will not be deductible. An exception does exist, permitting deductions of debt attributable to the excess portion, if the debt was incurred to finance certain medical or educational expenses, which are specified in the Act. The relative value of any deduction available to a Unit Owner will depend on his income tax bracket. This discussion of the Act relative to the deductibility of real estate taxes levied against a Unit and interest attributable to a mortgage secured by a Unit is not intended to be exhaustive. Buyers should consult their own legal and financial advisors to determine whether any deductions will benefit them. Neither the Developer, the Association, any real estate broker or sales agent that might be retained by the Developer for the purpose of advertising and promoting the sale of Units offered hereunder, nor any of their agents or employees, may make or are authorized to make any representation as to the right of any individual purchaser to deduct for federal income tax purposes monies spent by a Unit Owner on account of the ownership of a Unit. Any statement to the contrary is void.
Each prospective purchaser should be aware that the Unit Owner's title to the Unit itself cannot be separated from his interest in the Common Elements. In addition, each prospective purchaser should be aware that, as a Unit Owner, he will be bound by the terms of the Master Deed and By-Laws and any Rules and Regulations promulgated or adopted by the Board of Directors of the Association, as well as any amendments or supplements to these documents. The Unit Owner's interest in the Condominium is defined and governed by these documents as well as by the New Jersey Condominium Act and settled common law principles of property ownership.
In granting its approvals for the Condominium, the Township sought to insure that families of low or moderate income would be able to afford certain Units at the Condominium. The portion of the Township Zoning Ordinance which mandates the provision of low and moderate income housing was implemented in response to the decision of the New Jersey Supreme Court in the case of South Burlington County NAACP vs. Mt. Laurel Township, 92 N.J. 158 (1983). The ordinance requires that in a development like the Condominium, twenty (20%) percent of the Units be set aside for occupancy by low and moderate income households. Thus, based upon a Condominium of five hundred twenty-seven (527) Units, one hundred six (106) units will be subject to the restrictions hereinafter set forth. The precise income qualification criteria and other restrictions regarding these Units, including certain restrictions on resale, will be set forth in the "Affordable Housing Plan for The Cedars, A Condominium" which is Exhibit 7 of this Public Offering Statement. The Affordable Housing Units, as shown on the Site Plan, are not scheduled to be constructed and the Units sold until Sections II and III are developed. Since construction has not yet commenced, aspects of the Affordable Housing Plan, including the income criteria that must be satisfied by a purchaser in order to be qualified to purchase an Affordable Housing Unit, have not yet been finalized. Accordingly, certain of these figures are absent from the Affordable Housing Plan as it appears in Exhibit 7. At the time the Developer commences the sale and marketing of the Affordable Housing Units, an appropriate amendment to this Plan will be registered with the Department of Community Affairs incorporating the finalized Affordable Housing Plan. Certain other restrictions applicable only to the low and moderate income Units (hereinafter "Affordable Housing Units") are described in the succeeding sections of this plan. Additionally, the locations of the Affordable Housing Units in the Condominium are graphically illustrated in the Site Plan, as "Affordable Housing Units". Copies of the Township's approvals are available at the sales office for examination by prospective purchasers.
