When it comes to your property owners association, there are a lot of terms that may be new or perhaps not clear. As you look through relevant documents and governing contracts, you have to understand the language used to fully grasp what is required.
There are a number of different terms used when referring to a condominium or community association such as homeowners association (HOA), property owners association (POA), unit owners association (UOA), and community association (CA), for example.
After 25 years in the industry, I have noticed some frequently asked questions when it comes to terminology. Here are the definitions of common property owners association terms:
What is a homeowners and condominium association?
It is a corporation registered with the state and managed by a duly elected board of directors. Most associations are registered as nonprofit corporations. Its purpose is to maintain all common areas and to govern the community in accordance with the provision of the governing legal documents: declarations or covenants, conditions and restrictions (CC&R), bylaws and articles of incorporation. The corporation is financially supported by all members of the homeowners or condominium association. Membership is both automatic and mandatory.
What are the bylaws?
The bylaws are the guidelines for the operation of the homeowners or condominium association. The bylaws define the duties of the various offices of the board of directors; how elections will be handled; the terms of the directors; the memberships’ voting rights; required meetings and notices of meetings; and the principal office of the association, as well as other specific items that are necessary to run the association as a business.
What are the CC&Rs?
The declaration of covenants, conditions and restrictions (CC&R or DCCR) are the governing legal documents that set up the guidelines for the operation of the planned community or condominium. The CC&R was recorded by the original developer in the county in which the property is located and is included in the title to your property. Failure to abide by the CC&R may result in a fine to a property owner by the association.
What does the board of directors do?
The powers and duties of the board include: set and collect annual assessments; use and expend the assessments collected to operate, maintain, repair replace, modify, care for, manage and preserve the common areas; procure, maintain and pay premiums for insurance; contract for and discharge management of the association; amend and add to the rules and regulations governing the use of the common areas; purchase equipment; and more.
What is a common area?
A common area is designated on the recorded plat of the community as land and community assets that are not sold to an individual owner. In a planned community, the common areas are owned by the association, where as in a condominium association the common areas are owned by all owners in undivided interest. You will also see the term “limited common areas.” A limited common area is common area that is for the exclusive use of fewer than all the owners of an association.
What is my assessment?
The assessment is the periodic amount due from each owner to cover the operating expenses of the common area or areas and to provide for reserve funds for replacement of common facilities in future years. Your assessments are due on the first of the month (or quarter, or semi-annually or annually as outlined in the governing docs). Statements are typically sent for assessments as a reminder of the amount due.
What is the board of directors?
The homeowners or condominium association is a corporation and therefore a governing body that is required to oversee its business. The board of directors is elected by the property owners, or as otherwise specified in the bylaws. The limitation and restrictions of the powers of the board of directors is outlined in the association governing documents.
Who is the declarant?
The development company and its successors and assigns.
What does the management company do?
A professional management company is contracted by the board of directors to properly maintain the common areas and conduct the business affairs of the association. A management company provides services such as: collection of assessments; overseeing of subcontractors; obtaining bids for subcontracted services; providing financial statements and collection reports, as well as serving a general clearinghouse for problem solving; communicating with property owners and the board of directors; and serving in an adviser capacity. The management company reports directly to the board and all decisions are made by a majority vote of the board of directors. (Please note that services provided by a management company will depend on the individual agreements between a community association management company and the client association.)
If you are interested in talking to us about how we can help your association, we’d love to chat.
Mike Stonestreet is a 26-year veteran of the professional HOA management industry who has achieved one of the highest education-based designations in the field, that of Professional Community Association Manager (PCAM). Community Association Management Services (CAMS) has been a leading association management company since its inception in 1991. CAMS is a trusted provider of management services for more than 265 associations throughout North Carolina, South Carolina and Georgia. To find out how CAMS can benefit your community, call (910) 256-2021, email [email protected], or visit www.CAMSmgt.com.
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