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An assembly of people associated for some religious, scientific, fraternal, or recreational purpose. Members of such associations are not personally liable for debts incurred in the acquisition or leasing of real property used by the association, unless they specifically assume liability in writing. The association itself normally does not hold title to property; any title is held through a trustee. Therefore, it is important when dealing with unincorporated associations, such as churches, that the broker check to see whether the person representing the association has actual authority to convey title to the property. A majority of condominium owners’ associations are unincorporated.

The Internal Revenue Code allows two types of housing associations to elect to be treated as tax-exempt organizations—condominium management associations and residential real estate management associations. However, this tax-exempt status protects the association from tax only on its exempt-function income, such as membership dues, fees, and assessments received from member/owners of residential units in the particular condominium or subdivision involved. For example, on any net income that is not exempt-function income, the association is taxed at corporate rates but is not permitted the corporate surtax exemption granted to regular domestic corporations.
Dearborn Real Estate Education
This "Word of the day" is excerpted from The Language of Real Estate, 6th Edition by John Reilly (published by Dearborn Real Estate Education, 2006 copyright). To purchase the complete book, with over 2800 key terms and definitions, or to browse through Dearborn's hundreds of other professional real estate titles, including Real Estate Technology Guide by Klein, Barnett, Reilly, click here.