The Language of HOAs: Terms You Should Know

Now that you’re on the board of your homeowner or condominium association, it’s time to jump right in and start making a difference for your community. But before you begin, it’s important to get clarity on a few important terms all Arizona board members should know.
 
Don’t worry – there’s not too much to learn. And you can help the process along by making a list of terms with their definitions and revisiting them every so often. You can also talk to your community management company to see if there’s more you need to learn in order to make the most of your role.
 
Board of Directors: Let’s start with the basics. Under the Arizona Nonprofit Corporations Act, your community association is a non-profit corporation, and corporations are led by groups of individuals who make up the Board of Directors. The board’s role is to carry out the duties and responsibilities of the association as set forth by the governing documents. Each board has a few specific members: A president, who acts as the chief executive officer; the vice president, who can exercise all of the powers of the president in his or her absence; the secretary, who keeps and maintains records; and the treasurer, who provides custodial duties when it comes to association funds and financial records.
 
Articles of Incorporation: Put simply, the articles of incorporation are a legal document that establishes the association as an entity. It can be in the form of a corporate charter, and it also outlines the purpose and powers of the association and provides details on the structure of your board. You can usually find this document filed with the state.
 
Bylaws: This is basically a set of rules. Typically, they concern what’s required to be a member of the association, and they might also define the rules for holding meetings, outline members’ voting rights, make clear your community’s election procedures, stipulate quorum requirements and describe the responsibilities and powers of the association board.
 
Community/Maintenance Fees: Fees are what fund the association. For the most part, they’re paid by community members by the week, month or year. Also called “dues,” these funds pay for community maintenance, upkeep of amenities, security, the cost of community events, and insurance, to name a few.
 
Community or Property Manager: This is an individual who is hired and approved by the board and is tasked with managing the day-to-day requirements of the community. This role can include enforcing bylaws, administering guidelines, and consulting on fiscal items, maintenance issues and much more.

Declaration, CC&Rs, or Master Deed: The purpose of these documents is to declare state ownership rights and make clear any limitations that might affect members of the association and the community. Why all the different names for the same thing? Well, it depends on your community type. Throughout Arizona, condos and co-ops usually call these documents a declaration or master deed. The term CC&R’s (short for covenants, conditions and restrictions) is typically used for planned communities. No matter what they’re called, these documents:

1. Address what property (including common element %) is owned by the individual and what is owned by the community at large;
2. Create a relationship among all owners to each other and the community for maintaining, funding, and governing the development;
3. Set standards, restrictions, and obligations based on architectural control and other activities to promote communal harmony; 
4. Create administrative framework; and 
5. Provide transition of control of the association from the developer to the property owners. 

Hierarchy of Authority: This is a big phrase that means something pretty simple: the collection of governing documents used by a community association. The actual documents that make up this collection may vary among different communities, but generally speaking, they include:

1. Recorded map or plan 
2. Declarations, CC&Rs, master deed, proprietary lease, or occupancy agreement
3. Article of incorporation
4. Bylaws 
5. Rules and regulations
6. And any other items necessary to the community 

Local Laws and Regulations: Your association isn’t the only entity making rules. Cities and towns in Arizona have their own regulations as well, and they might significantly impact your community. For instance, local fire codes might mean you have to install (and have inspected) sprinkler systems or exit signage in your buildings. Officials may be coming out to test the water in your pool and inspect its safety features. Local taxes might apply, too. You’ll want to be familiar with these local regulations – some of their associated costs may need to be paid for with community fees. Check out your local county and municipal websites for requirements, or talk to a good community management company about what might affect you.
 
Recorded Map or Plan: You can find this document in your county recorder’s office. It shows the complete layout of your community, including the location of all the lots before they were sold to individual owners. Common areas are also depicted. You’ll find this document comes in handy if you need to identify title to a property. It also provides clarity for who’s responsible for maintaining a piece of property (owner or association) and helps determine if the property has been located properly within the community.
 
Resolutions: HOA board members adopt resolutions that work as rules or regulations. Your board should keep a Book of Resolutions that contains all of these measures (ideally, it’s organized and indexed so items are easy to find). Different types of resolutions include:

1. Policy: These resolutions affect owners’ rights and regulations and address items including common areas, architectural provisions, and enforcement procedures.
2. Administration: These address internal workings of the community including operations, collections, location of meetings being held, etc.
3. Special: These are rulings made by board members that apply to an individual situation including a rule violation or actions taken following a lawsuit.
4. General: These outline routine, ordinary events on a community’s calendar such as budgets or approval of contracts.

There you have it – the basics for speaking the language of HOAs. For more board member help, contact FirstService Residential, Arizona’s community management leader.