Frequently Asked Questions (FAQs)
· Question: What is an 'Assessment'?
Answer: Homeowner associations can compel homeowners to pay a share of common expenses, usually per-unit or based on square footage. These expenses generally arise from common property, which varies dramatically depending on the type of association. Some associations are, quite literally, towns, complete with private roads, services, utilities, amenities, community buildings, pools, and even schools. Many condominium associations consider the roofs and exteriors of the structures as the responsibility of the association. Other associations have no common property, but may charge for services or other matters.
· Question: Are 'Dues' different than 'Assessments'?
Answer: A predetermined set of fees usually referred to as 'Dues' are collected by HOAs, Community Associations, or divisions of property management for the upkeep of said organizations or neighborhoods in general. These fees are billed at intervals, sometimes by month, quarter, or annually.
· Question: What is a 'Homeowners Association (HOA)'?
Answer: A Homeowners Association (HOA) is a legal entity created by a real estate developer for the purpose of developing, managing and selling a community of homes. It is given the authority to enforce the covenants, conditions & restrictions (CC&Rs) and to manage the common amenities of the development. It allows a developer to end their responsibility over the community, typically by transferring ownership of the association to the homeowners after selling. Generally accepted as a voluntary association of homeowners gathered together to protect their property values and to improve the neighborhood, a large percentage of U.S neighborhoods where free standing homes exist have an HOA. Most homeowners associations are nonprofit organizations and are subject to state statutes that govern non-profit corporations and homeowners associations.
· Question: What is an 'Association Management Company' and what do they do?
Answer: A property management entity contracted by a Board of Directors or community to provide a variety of services including but not limited to collecting assessments, sub-contractor endeavors, financial advisement and statement/reports preparation and analysis, general maintenance and problem resolution, and advisement on legal and other property related matters. Some of these companies manage hundreds of properties simultaneously, while others focus on individual properties.
· Question: What is a 'Managing Agent'?
Answer: A Managing Agent is a person or entity hired specifically to assist the board of directors in enforcing the documents and managing the assets, funds, and interests of the association.
· Question: What is a 'Proxy'?
Answer: An individual appointed to act or vote on behalf of another person by representing them at a meeting of the association. The title can also refer to the written piece of paper granting that power.
· Question: What is a 'Quorum'?
Answer: A Quorum is defined as the minimum number of owners required to hold an official meeting of the association. The number of owners required can vary greatly according to the corresponding association's governing documents.
· Question: What is a 'Recuse'?
Answer: The act of initiating a Recuse involves the temporary removal of an association member or board member, or the act of disallowing his or her participation in a particular vote or proceeding.
· Question: What is a 'Board of Directors'?
Answer: In relation to an HOA, community or other formal organization, a director is an officer charged with the conduct and management of its affairs. The directors collectively are referred to as a board of directors, and are generally elected or appointed. Sometimes the board will appoint one of its members to be the chair, making this person the President of the Board of Directors or Chairman.
· Question: How do I contact my Board of Directors?
Answer: If your community has a Board of Directors, contact information, meeting times, minutes, and other information can be obtained through checking the Board information area of your community website.
· Question: What are 'CC&Rs'?
Answer: The term CC&R refers to 'Covenants, Conditions & Restrictions'. A real covenant is a legal obligation imposed in a deed by the seller of a home and or property upon the buyer of the real estate to do or not to do something. Such restrictions frequently 'run with the land' and are enforceable on future buyers of the property. Examples might be to maintain a property in a reasonable state of repair, to preserve a sight-line for a neighboring property, not to run a business from a residence, or not to build on certain parts of the property. Many covenants are very simple and are meant only to protect a neighborhood from homeowners destroying trees or historic landmarks or otherwise directly harming property values. Some can be more specific and stricter, outlining everything a homeowner can do to the exterior of their home, including the number of non-familial tenants one may have, acceptable colors to re-paint the home, exactly when holiday decorations are allowed up, automobile placement or repair on property, satellite placement, etc.
· Question: What Are 'Bylaws'?
Answer: A set of rules or guidelines regarding the operation of a non-profit corporation such as a Board. Bylaws generally set forth definitions of offices and committees involved with the Board of Directors. They can include voting rights, meetings, notices, and other areas involved with the successful operation of the Association.
· Question: What are 'Governing Documents'?
Answer: The declaration, bylaws, operating rules, articles of incorporation or any other documents which govern the normal operating procedures of an association.
· Question: What is a 'Lien'?
Answer: A monetary claim levied against a property for unpaid mortgage, taxes, contractor work, or other charges. "A Lien is attached to the property, not the owner, but legally must be recorded in the property records of the county of residence. If a Lien is in place, the property owner has very limited ability to do anything involving the property until the Lien is satisfied or removed".
· Question: What is the 'Declaration'?
Answer: The Declaration is 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 which can include payment of dues and assessments as well as the association's various duties to the owners. It is commonly viewed as somewhat of a 'constitution' of the association. The person or group of persons who either signs the original declaration governing the development and association or acquires the original developer's rights is referred to as the 'Declarant.'
· Question: What is an 'Estoppel Letter'?
Answer: An estoppel letter is used in a transfer or conveyance of real property prior to the Closing transaction. The document is sent to a bank (or other lender), to an HOA (or Condo Association), to a city/municipality, or a tenant requesting payoff of a mortgage, assessments or taxes due, or rental amounts due on a lease, to incorporate these amounts into the Settlement Statement for the buyer and seller of the real estate. Assessments and payments due must be incorporated into the amounts due at Closing and paid at the time of the Closing. Some amounts may be pro-rated, but all must be included in the Settlement Statement. The estoppel letter is the document that facilitates this process.
· Question: What is an 'Easement'?
Answer: An interest or a right in real property which grants the ability to a landowner to use the land of another for a special purpose or endeavor. An association may for example have an easement for slope maintenance or other repair purposes. A public utility may also have an easement for maintenance or repair work to be executed at a future date.
· Question: What is a 'Notice of Noncompliance'?
Answer: Similar in essence to a lien, the Notice of Noncompliance is a document sometimes authorized under the CC&Rs and may be recorded in the county property records. Its essential purpose is to notify prospective buyers that the property is in violation of the documents.
· Question: What is a 'Common Area'?
Answer: Any area of improved real property intended for shared use by the members of an association.
· Question : What are 'Ordinances'?
Answer: An Ordinance is an individual or set of laws adopted by local government at the county and city level.