Important Terms All Association Members Should Know

Posted on Monday May 09, 2016 |



Like any industry or area of expertise, homeowners’ association (HOA) leadership has a language that’s unique to itself. Learning this language can present a barrier to those who are new to board leadership, so we’ve put together a bit of a primer here.

Don’t be discouraged by the length of this list (and the density of some of the concepts). Some of these ideas may take some effort to unpack and make sense of, but dedicating yourself to learning a little bit more every day will soon put you on the road to mastery. Before you know it, you’ll be speaking the language of HOA like you were born to it.

For an in-depth education, it’s a good idea to speak to a community association manager, if you have one. If not, this list should get you started.
 
Articles of Incorporation: This is where it all begins. Your Articles of Incorporation mark the establishment of your association. It should be filed with the state. Typically, it will define your association as a corporation, specifically as a non-profit, non-stock entity. The articles could take shape as a corporate charter that focuses on things like outlining the association’s powers, defining its purpose, and creating an outline of how the board of directors should be structured.
 
Bylaws: The formal regulations adopted by the association are called “bylaws.” These usually address requirements for community membership, meetings rules (see “resolutions” below), rights of voters, quorum requirements, responsibilities of the board, procedures for elections and delineation of board powers. 
 
HOA Assessments: These are the monthly, quarterly, semi-annual or annual dues paid by members to cover the services offered by the community (think landscaping upkeep, pool maintenance, garbage collection, special events, insurance and other items).
 
Community Manager: The community management company provides a Nevada licensed community manager that is tasked with administering policies that have been approved by the board. The community manager provides expertise and assistance with a variety of responsibilities encompassing fiscal efforts, maintenance oversight and administrative duties. This individual also acts at the direction of the board of directors.  

Declaration, CC&Rs, or Master Deed: These are different terms for documents that define state ownership rights and limitations that apply to community members. The term “Declaration” or “Master Deed” most often applies to condos and co-ops. “Covenants, Conditions and Restrictions” (or CC&Rs) applies to a planned community. No matter what they’re called, they can be enforced by the community management company and board of directors. The function of these documents is to…

  • Address what property (including common element percentage) is owned by the individual and what is owned by the community at large;
  • Create a relationship among all owners to each other and the community for maintaining, funding, and governing the development;
  • Set standards, restrictions, and obligations based on architectural control and other activities to promote communal harmony; 
  • Create administrative framework; and 
  • Provide transition of control of the association from the developer to the property owners.
     
Hierarchy of Authority: Put simply, the hierarchy of authority involves the governing documents used by the HOA. This is going to differ among communities. In Nevada, the hierarchy of authority is generally laid out in Nevada Revised Statute 116 (NRS 116). These typically include:
  • Recorded map or plan 
  • Declarations, CC&Rs, master deed, proprietary lease, or occupancy agreement
  • Article of incorporation
  • Bylaws 
  • Rules and regulations
  • And any other items necessary to the community

Local Laws and Regulations: Nevada counties and cities have their own codes, laws, and services, depending on the municipality. These local laws and regulations can have a profound impact on your annual budget and should be incorporated into the HOA assessment. Common examples include the installation of sprinkler systems to meet fire codes, water testing of swimming pools, required annual filings and more. A -community manager can help determine what local laws you need to comply with, and how to fold them into your assessments.
 
Recorded Map or Plan: This is the document that shows the location of every lot in your community – pre-sale – along with the common areas. It may include both a definition of the plot of land in conjunction with an architectural drawing. The purpose? To identify the title to property, determine which party is responsible for maintaining a specific part of the community, and to define the proper location of every piece of property. You can normally find this document filed with the county recorder and assessor’s office.
 
Resolutions: Resolutions are adopted by the association board, and they outline rules and regulations that apply community-wide. Arriving at resolutions should happen in accordance with Robert’s Rules of Order– a text that defines parliamentary procedures. This isn’t just a matter of making a good, orderly meeting...it’s a matter of the law. NRS 116 requires the use of Robert’s Rules of Order, unless previous bylaws dictate otherwise. In any case, it’s best to keep your resolutions in a single book so they are easy to find and organize.
  • Policy: These resolutions affect owners’ rights and regulations and address items including common areas, architectural provisions, and enforcement procedures.
  • Administration: These address internal workings of the community including operations, collections, location of meetings being held, etc.
  • Special: These are rulings made by board members that apply to an individual situation including a rule violation or actions taken following a lawsuit.
  • General: These outline routine, ordinary events on a community’s calendar such as budgets or approval of contracts.

For more information on how to be the best board member you can be, contact FirstService Residential today.

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