Association FAQs
What is the purpose of an association?
A Homeowners’ Association is run by a board of directors that is elected by homeowners to oversee the common assets of a property/area, manage its finances, run business affairs, enforce and set rules, and see to the maintenance and upkeep of the area.
What does an association management company do?
An association management company is a property management company contracted by the board of directors or community to provide management and administrative services on a fee-for-service basis. They provide a variety of services including, but not limited to, collecting assessments/dues, vendor management, project management, financial reporting, homeowner communication, general maintenance, and conflict resolution. The management company reports to the board of directors and all decisions related to the association are made through a majority vote of the board of directors.
What is a board of directors?
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 are referred to as a board of directors, and are either elected or appointed.
What are governing documents?
The governing documents contain the declaration, bylaws, operating rules, and articles of incorporation or any other documents which govern the normal operating procedures of the association.
What is the declaration?
The declaration may be 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.
What are bylaws?
Bylaws are a set of rules or guidelines regarding the operation of a non-profit corporation such as a board. Bylaws usually 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 operation of the Association.
What is an assessment?
Generally, the monthly assessment (also referred to as dues) consists of two parts:
- An amount to cover current year operations. Part of the monthly fee will be designated to pay for current year operations, which typically includes things such as landscaping, snow removal, pool maintenance, insurance, and water.
- An amount that goes into reserves. The remaining portion of the monthly fee is placed into reserves for long-term repairs and replacements, such as paying for a new roof for the community center, a new road, or to cover the cost of building additional parking lots. Having ample reserves ensures that the association has money available to pay for high-cost repairs when they come due.
So long as the association board is able to accurately predict which repairs will come due and when, the monthly dues should cover the current operating expenses as well as long-term repairs.
What is a special assessment?
Occasionally, the association might need to come up with funds in excess of the money raised by the monthly fees. In that case, the board usually has the authority to impose a special assessment to cover the one-time expense of a major repair or improvement.
What happens if I don’t pay my assessment?
Late payments may result in a late charge. In addition, the governing documents may allow the association to charge interest and to proceed with a lien on your property, foreclosure proceeding, or a judgment and collections for nonpayment of assessments.
What is a proxy?
A proxy is an individual appointed to act or vote on behalf of another person by representing them at a meeting of owners of the association. The title can also refer to the written piece of paper granting that power.
What is a quorum?
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 according to the corresponding association’s governing documents.
What is a lien?
A lien is a monetary claim levied against a property for unpaid mortgage, taxes, vendor 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.