Terminology

The Board of Directors

President

  • Chief executive officer and leader of the association
  • Presides at all meetings of the board and membership
  • Executes legal documents on behalf of the association
  • Sets meeting agendas and controls all meetings
  • Represents the board before the residents
  • May have nominating, if not appointment, responsibility for all committees

Vice President

  • Performs all of the duties of the president in his/her absence
  • Typically shares some of the burden of the president regarding appearances, liaison, public hearings, etc.
  • Usually assigned liaison responsibility to specific staff or contractors, and to specific committees

Secretary

  • Prepares and distributes board and membership meeting agendas, minutes, and materials referred to in minutes
  • Maintains minutes and book on all meetings
  • Maintains book of resolutions
  • Maintains all official records, including official correspondence, contracts, membership roster, etc.
  • Receives, verifies, and maintains all proxies
  • Attests, by signature, to the legitimacy of certain documents

Treasurer

  • Works with appropriate staff, contractors, and committees to develop and submit annual operating budget for approval
  • Maintains adequate records of all association financial transactions

PERSPECTIVES OF BOARD AND HOMEOWNER

 

Board of Directors’ Perspective

  • Maintaining the value of the property and a good quality of life for the residential community
  • Governing smoothly
  • Enforcing rules
  • Overseeing the budget vs. actual expenditures

Homeowners’ Perspective

  • Most care a great deal about residences
  • Will want service from manager and decisions from Board that will maintain and enhance the property values within the community as when purchases
  • Problems may arise when expectations are too high or not realistic; this can occur when interests are too specialized or unique

 

GOVERNING DOCUMENTS

  • All documents that regulate the community life
  • Documents may vary depending on type of Association (condo, townhome, etc.)
    • State law
    • Declaration of Covenants or Master Deed
    • Conditions and Restrictions
    • Bylaws
    • Rules and Regulations
    • Plats of Survey and Easement Agreements (may be separate, often included in the declaration)

BASIC LEGAL DOCUMENTS 

  • State Enabling Statute-permits the creation of condominium/townhome form of ownership and prescribes the basis of determining ownership interest, rights and obligations of the owners, duties and powers of the association, and the process of dissolution of the condominium
  • Subdivision of Condomimium/Townhome Plat-describes the location and nature of the common elements and the units
  • Condominium Declaration or Master Deed-defines the units, common and limited common elements, and is the collection of covenants imposed on the property to provide for:
    • The basis for allocation of percentage ownership interest
    • The obligation of each owner to share in funding the cost of association operations
    • The power, authority, and responsibility of the association in its operations and in making and enforcing rules
  • Individual Unit Deeds-comprises the individual unit deed
  • Articles of Incorporation-creates the association as a corporation under state corporate statute and defines its membership and sets forth the process for creating the board of directors, voting procedures, etc.
  • Bylaws-implements, in specific detail, the provisions of the Declaration and the Articles of Incorporation regarding the association operations, including delineation of the meeting process, election procedures, powers and duties, board meetings, committees, insurance requirements, rule-making and enforcement process
  • Rules and Regulations-sets forth the operational powers or provisions and the use restrictions adopted by the association

Legal Documents for Homeowner Associations and the Hierarchy of such Documents

  • Subdivision Plat-describes the location and nature of the common property and the individual lots
  • Property Deeds-comprise the individual lot deeds and the deeds to common property which give a legal description of the property
  • The Declaration of Covenants, Conditions, and Restrictions-the declaration of CC&R’s is the collection of covenants imposed on all property within the development and provides:
    • For automatic association membership of all owners and the basis for voting rights
    • The obligation of each owner to share in funding the cost of association operations
    • Certain restrictions (architectural control and other rules) on the use of the property and the association’s enforcement powers
    • Sets forth the power and authority of the association to own and maintain the common property and to make and enforce rules
  • Articles of Incorporation-creates the association as a legal entity under state corporate statute; defines the board powers and responsibilities of the association and its membership; and, sets forth the process for creating the board of directors, voting system, etc.
  • Bylaws-implements, in specific detail, the provisions of the CC&R’s and the Articles of Incorporation regarding the association operations, including delineation of the meeting process, election procedures, powers and duties, board meetings, committees, insurance requirements, rule-making and enforcement process
  • Rules and Regulations-sets forth the operational powers or provisions and the use restrictions adopted by the association

APPLICABLE CIVIL RIGHTS LAWS

  • Prohibition against racial discrimination as stated by the Civil Rights Act of 1866
  • Equal Credit Opportunity
  • Fair Housing Amendments Acts, 1988, applies to sale of residence
      Does not prohibit discrimination by owners, if selling or renting as long as they own 3 or less homes
  • Board is prohibited from discrimination in exercising its 1st right of refusal
  • Association must abide by laws prohibiting discrimination against families with kids
  • Persons with disabilities (at own expense) must be allowed to make accommodations per the Americans with Disabilities Act, 1993

ACCOUNTING BASICS

  • Cash Method of Accounting records income when received and expenses when paid. This is the way that most of us keep our personal checking accounts.
  • Accrual Method of Accounting records income when earned or billed (as opposed to when received) and expense when incurred (as opposed to when is paid). 
  • Modified Accrual Accounting is a combination of cash and accrual accounting. Generally, assessment income is recorded on an accrual basis (i.e., when billed or earned) and most expenses are recorded on a cash basis (i.e., when paid). The modified accrual method of accounting has become an industry standard across the USA and is the form of accounting used by CMA.
  • Fund Accounting segregates the association’s financial activities into two or more principal funds: generally, the Operating Fund and a fund for future major repairs and replacements, the Replacement Fund, which is commonly referred to as Repair and Replacement Reserves. 
  • Repair and Replacement Reserve is the amount allocated for major capital repairs and replacements and may be broken down into several components. The total amount allocated to each component should be fully funded. The amount in the Restricted Investments under the Asset portion of the Balance Sheet should equal the total amount allocated.  This fund is commonly referred to as the Replacement Fund.