Below is a list of some community association terminology that you may have heard your manager or Board of Directors use in emails or other communication. We will touch on many of these topics and ideas in future posts, so stay tuned for a more in-depth review coming soon.
Architectural Committee: Also referred to as the Architectural Review Committee or “ARC”. The architectural committee has control of the architectural standards of the association. They also manage the Architectural Review Committee (ARC) application and approval processes.
Assessments: The assessment is the periodic amount due from each owner to cover the common area expenses, pay for ongoing maintenance services within the community and fund reserve accounts. The community's governing documents will determine assessment frequency and due dates. In addition, the board of directors has the authority to raise assessments when needed to keep up with the rising costs of labor and materials. Assessments are an obligation per the association declaration – dues are voluntary, which is why we don't refer to these as dues.
Association Manager: The association manager advises the association governing body in matters that concern administrative, managerial, and operational processes. A manager can, depending on their responsibilities, account for financial activities covered by the management agreement, conduct onsite property inspections, solicit, and evaluate bids for association services, supervise maintenance activities and contractor performance, authorize payment for association services, and coordinate with the state agency that supervises the community associations. The association manager works at the direction of the Board of Directors.
Association Management Company: An association management company is hired by an HOA Board of Directors or community to provide a variety of services. These may include collecting fees and assessments, subcontractor management, financial advice, and report preparation. An association management company may also be involved in general maintenance, problem resolution, and advice on legal matters.
· Exhibit professionalism and loyalty to the principal (the Board)
· Exercise diligence in performing duties on the principal’s behalf
· Account for financial activities covered by the Management Agreement
· Perform on-site property inspections
· Solicit and evaluate bids for association services
· Supervise maintenance activities and contractor performance
· Oversee and authorize payment for primary association services
· Know and abide by Bylaws, recognizing the State agency that supervises the community associations
The Board of Directors: The board of directors (the “Board”) is made up of officers responsible for the conduct and management of its affairs. A director may be an inside director or an outside independent director. Some boards appoint one of its members to be the chairman or chairwoman of the body. Depending on the management agreement, some of the board’s responsibilities can be turned over to a managing company. The Board is made up of the President, Vice President, Treasurer, Secretary, and other At Large positions as needed.
Budget: The budget is part of the financial plan for an HOA which estimates income, expenses, and reserves for a specified period of time, e.g., an annual budget.
Bylaws: Bylaws are the set of rules or guidelines related to the operation of an Association Board. The Association's Bylaws contain guidelines for the operation and management of the Association. Bylaws generally contain the definitions of offices and committees involved with the Board of Directors. The bylaws also include guidelines on voting rights, meetings, notices, and other activities involved with the operation of the association.
Condominium Association: A Condominium Association is a type of common-interest development governed by the elected Board of Directors in accordance with the Association's governing documents and applicable laws. Condominium owners own their units and a portion of the Association's common area which is owned jointly by all owners in the Association.
Committee: Community association committees typically consist of volunteer members appointed by the board of directors. The role of these committees is to assist the board in fact-finding, making recommendations, and gathering different viewpoints on community issues. The number and type of committees will depend on the size of the community. There are standing committees that stay in place long-term (think a social committee or landscaping committee) and ad-hoc committees (committees formed for a specific purpose that will dissolve once that purpose has been met). Joining a committee is a great way to increase member participation in the community.
Common Areas: A common area is designated land in the community that isn't sold to individual owners but is owned by the association. In a single-family neighborhood, some examples of common areas might be playgrounds, neighborhood parks, stormwater ponds, or community pools. In a condominium, the common area includes the building, hallways, and other structures.
Common Interest Development: Common Interest Development (CID) is a type of home ownership in self-governed private communities. CIDs are developed in many different types and styles, such as single-family homes, condominiums, townhouses, and apartment-like multi-story high rises known as cooperatives.
Community Association: A community association is a non-profit corporation registered with the State and managed by a Board of Directors and exists to preserve the quality of the community and the value of the property owned by members, making it a preferred place to call home.
Covenants, Conditions & Restrictions (CC&Rs or Declaration): The Declaration of Covenants, Conditions & Restrictions (The “CC&Rs” or “Declaration”) defines the contractual obligations of the HOA. The CC&Rs form part of the association’s governing rules. It contains guidelines on how the Association and its Board of Directors should govern to protect the interest of the Association and its members. The CC&Rs also contain guidelines on the members’ obligations as well.
Covenant Violations: Covenant violations (“Violations” or “Enforcement Issues “) occur when owners are found to be in violation of any community rules and regulations.
Fiduciary Responsibility: Fiduciary responsibility refers to the ethical and moral obligation of the Board to make decisions for the benefit of everyone in the community in a fair and prompt manner.
Fines: When an association rule or regulation is violated, a fine can be issued to a homeowner or board member. HOA fine amounts are usually specified in the governing documents and other local and state laws that cover associations.
Governing Documents: Governing documents make up all documents that regulate the community, as they apply to the type of association. Governing documents include state laws, Declaration of Covenants (CC&Rs), Master Deed Conditions and Restrictions, Bylaws, HOA Rules and Regulations, and Plats of Survey and Easement Agreements.
Limited Common Element: A Limited Common element is a portion of the common elements allocated for the exclusive use of one or more but fewer than all the units.
Membership: Membership is automatic when a person acquires ownership of a property in a common interest development.
Open Meeting: Open meetings are association board meetings where the board members, as well as the residents, are allowed to attend. Typically, the board adjourns an open meeting to follow it up with an internal session to consider matters like litigation, the formation of contracts, member discipline, personnel matters, or any issues with the payment of assessments.
Quorum: A quorum is the minimum number of owners required to hold a meeting with legally binding decisions for the association. The number of owners required “to have quorum” is defined in the association’s bylaws.
Reserve Fund: The reserve fund (sometimes called capital reserves) is a separate bank account set up by the association to fund large, non-recurring repairs. Reserve funds may be used for these repairs, such as repaving streets or roof replacements. Reserves can also be used for damage caused by natural disasters such as hurricanes or deep freezes. However, reserves should never be used for regularly occurring expenses.
Reserve Study: A Reserve Study is a planning report used for managing the HOA reserve fund. A reserve study typically assesses the current status of the HOA Reserve Account, then proposes a funding plan to build it up for later use.
Rules and Regulations: Rules and Regulations set forth the operational powers or provisions and the use restrictions adopted by the association.