Association

Terminology

A Who's Who in a Community Association

Association Manager
  • Advise and provide administrative, managerial, and operational counsel to the association governing body
  • Exhibit professionalism and loyalty to the principal (the Board)
  • Exercise diligence in performing duties on the principals behalf
  • Account for financial activities covered by the Management Agreement
  • Perform onsite 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 the Bylaws, recognizing the State agency that supervises the community associations

The Board of Directors

Depending on the management agreement, some of the following responsibilities can be turned over to a managing company

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 books 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
  • Maintains roster of disbursement of funds, as authorized
  • Prepares period financial reports
  • Arranges, subject to board approval, an independent audit of financial affairs

Perspectives of Board, Homeowner, and Manager

Board of Director's Perspective
  • Maintaining the value of the property and a good quality of life for the residential community
  • Governing smoothly
  • Enforces rules
  • Establishing and keeping budget
Homeowner's Perspective
  • Most care a great deal about residences
  • Will want service from manager and decisions from Board that will provide a good quality of life
  • Problems may arise when expectations are too high or not realistic; this can occur when interests are too specialized or unique
Manager's Perspective
  • Working in balance with homeowners, board, and realities of management company’s business (possible friction)
  • Problem-solver
  • Multi-task oriented

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 Condominium/Townhome 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

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
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
Subdivision of Condomimium/Townhome Plat

Describes the location and nature of the common elements and the units

Individual Unit Deeds

Comprises the individual unit deed

Rules and Regulations

Sets forth the operational powers or provisions and the use restrictions adopted by the association

Legal Docs 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
  • 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 three 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 children

Persons with disabilities (at own expense) must be allowed to make accommodations per the Americans with Disabilities Act, 1993

Accounting Basics

Accrual Method of Accounting

GHCM uses Modified Accrual Basis Accounting to prepare each association’s monthly financial statements. Accrual Basis Accounting means that income is recognized in the month it is earned (not collected) and expenses are recognized in the month they are incurred (not when invoiced or when payment is made). This provides better tracking for budget variances as well as a more accurate financial position of the Association. Modified Accrual Basis Accounting is an accepted variation where not all income or expenses are recognized on an accrual basis.

Capital Reserves

The Board has the obligation to repair and replace major capital facilities, buildings, and equipment of the association. The ideal method of providing for these future expenses is the establishment of a capital reserves system and budget to assure that such funds are available when needed. With knowledge that the future holds predictable major expenditures for repair and replacement of facilities and equipment, the association could begin the gradual accumulation of funds through a reserve account to meet all or a portion of that expense when it comes due.

QUESTIONS?

Want to ask a question before asking for a proposal? We are more than happy to answer any and all queries to make sure your community is able to thrive.