Glossary

Glossary

Here are some helpful terms.

 

A

Alternative Dispute Resolution

Also referred to as ADR. Any form of dispute resolution other than by formal court proceedings. Can include mediation, arbitration, etc.

Arbitration

An informal trial proceeding used to settle disputes rather than pursuing formal court proceedings. A decision by an arbitrator can be either binding (final decision) or non-binding (parties may ignore decision).

Areas of Responsibility

A document that outlines and defines the maintenance and/or insurance obligations of the association and its board of directors.

Articles of Incorporation

Documentation filed with a Secretary of State’s office that establishes general information about a corporation and its purpose.

Assessment

A fee levied against all property within a community association for the purpose of maintaining the common areas and related administrative functions of the association. These are provided for in the CC&Rs and are legally binding on the property owner. Assessments may take the form of a regular (annual) or special (for a special project or purpose) assessment.

Audit

The highest level of review of an association’s financial books and records. An audit generally involves a complete reconciliation of all vouchers, charges and expenditures. An annual audit is normally required by the association’s declaration.

B

Ballot

A piece of paper on which an association member registers his or her vote on a decision voted upon by the association at a called meeting.

Budget

The financial plan for an association that estimates income and expenses for a specific time period.

By-Laws

An association’s formal rules and regulations that govern the activities and actions of its board of directors.

C

CC&Rs

Covenants, Conditions and Restrictions are the association’s governing documents also referred to as the declaration, rules, regulations or master deed. The CC&Rs are filed in the real property records of the county in which the association is located.

Common Area

The improved real property shared by the members of an association.

Community Association

A property owners’ association requiring mandatory membership bound by governing documents which require individual owners to pay assessments for the maintenance and administration of the common areas.

Community Enhancement Fund

The Community Enhancement Fund is a special operating account created to support quality of life programs in a community association such as:

– Unique projects which are consistent with the spirit and focus of the community.
– Activities that improve the physical and aesthetic environment of the community.
– Initiatives that strengthen the community’s identity. 
– Partnerships and participation of residents and businesses in improving their community.

Funding the Community Enhancement Fund may be accomplished by a special budget allocation, by special assessment, by a fee imposed on all new purchasers, or by other means determined by the board of directors and authorized by state statute or the governing documents of the association.

Condominium

A development consisting of an undivided interest in a common area coupled with a separate interest in a unit.

Cooperative / Co-op

A development in which a corporation holds title to all improved real property and the corporation’s shareholders receive a right of exclusive occupancy in a portion of that real property.

D

Declaration

Sometimes referred to as the “master deed,” “documents,” or “declaration of covenants, conditions and restrictions” (CC&Rs). It describes an owner’s responsibilities to the association, including payment of dues and assessments as well as the association’s duties to the owners. It is essentially the constitution of the association.

Developer (Declarant)

The person or group who either signs the original declaration governing the development and association or acquires the original developer’s (declarant’s) rights.

Directors & Officers Liability Coverage

Insurance coverage that protects the association’s volunteer board members in lawsuits brought due to their actions taken on behalf of the association. Board members are not protected from actions proven to be criminal or negligent.

E

Easement

An interest or right in real property that grants a right to a landowner to use the land of another for a special purpose. An association may often have an easement for slope maintenance or other repair purposes, or a public utility may have an easement for maintenance or repairs.

Encroachment

Anything belonging to one landowner that extends onto an adjacent landowner’s property such as a fence, landscaping, etc.

F

Fee Simple

Absolute title to land, free of any other claims against the title, which one can sell or pass to another by will or inheritance. This is a redundant form of “fee,” but is used to show the fee (absolute title) is not a “conditional fee” or “determinable fee” or “fee tail.” Like “fee” it is often used in deeds transferring title as in “Harry Hadit grants to Robert Gotit title in fee simple …” or similar words.

Fiduciary

The highest ethical and moral obligations and duty of good faith a person is charged with for fulfilling their responsibilities. The board of directors of a community association has a fiduciary responsibility to act in the best interests of the association.

G

Governing Documents

The declaration, bylaws, operating rules, articles of incorporation or other documents governing the operation of the association.

I

Indemnity

A contract or agreement whereby one person agrees to protect and defend another against loss or damage.

Injunction

A request for the court to require a party to stop doing something (or sometimes to do something) until the situation can be resolved legally.

L

License

Permission granted by an owner to another for the execution of work on the owner’s land.

Lien

A monetary claim made against a property for unpaid mortgage, taxes, contractor work, or other charges. A lien attaches to the property, not the owner, but must be recorded in the property records of the resident county.

M

Managing Agent

A person or entity hired to assist the board of directors in enforcing the documents and managing the assets, including funds, of the association.

Mediation

An informal proceeding during which a neutral third person works with both parties in a legal dispute trying to reach a resolution.

Mitigate

An attempt to alleviate trouble or cause damage to be less severe.

Motion

A formal request, usually in writing, for a hearing and decision on a specific issue.

N

Net Income

The amount of money remaining after deducting total expenses and expenditures from total income.

Net Loss

This occurs when expenses are more than income.

Notice of Noncompliance

Similar to a lien, this notice is sometimes authorized under the CC&Rs and may be recorded in the county property records to notify prospective buyers that the property is in violation of the documents.

Nuisance

Arises from a person’s use of their property in violation of rules, laws, or standards which obstructs or injures the rights of another and creates annoyance, an inconvenience or discomfort. Examples of nuisance can be loud noises, odors or vehicles in disrepair on a property.

O

Ordinances

Laws adopted by local government at the county and city level.

P

Priority of Liens

Liens are usually ranked in the order in which they are “perfected” or recorded. As a result, “first in time, first in line” is how liens are normally prioritized.

Proxy

A person appointed to act or vote on behalf of another person by representing them at a meeting of the association. Also refers to the written piece of paper granting that power.

Q

Quorum 

The minimum number of owners required to hold a meeting of the association. The number of owners required varies according to the governing documents.

R

Recuse

To temporarily remove an association member or board member or disallow his or her participation in a particular vote or proceeding.

Remedy / Relief

Compensation sought by a plaintiff which can include money damages, injunctions, etc.

Reserves

Funds set aside by a community association for the future repair of, replacement of, or additions to major components the association is obligated to maintain.

Reserve Study

A study of the association’s reserve account requirements that identifies the major components for which the association has maintenance responsibility and their probable remaining useful life. It estimates the cost for the components and the total contribution necessary to finance those costs.

Review

An analysis of an association’s books and financial records that is less stringent than an audit.

Rules & Regulations

Rules the association’s board is authorized to adopt to implement and interpret the CC&Rs.

S

Statute of Limitations

A time period during which a complaint must be filed or it is not recognized.

T

Temporary Restraining Order / TRO

A court order obtained on short notice to stop a prohibited activity. It remains in effect until an injunction hearing can take place.

Title Insurance

Insurance provided by a title insurance company that reviews all recorded documents that impact the title of a particular piece of real estate. This title “search” discloses mortgages, liens or other encumbrances on the property that would negatively impact the purchaser’s ownership rights.

Title to Real Estate

Ownership of land and the right to use it.

Townhouse

A term used to describe an attached residential dwelling. A townhouse can be a planned development on a lot or a condominium.

Tract Map

A document recorded in the county real property records that shows the location of all lots within a tract and provides specific descriptions and dimensions.

W

Waiver

The voluntary relinquishment of a right, claim, or privilege.

Z

Zoning

A comprehensive system of land use controls normally reserved for city or county governments.

 

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