Glossary of HOA Terminology

Assessment A levy against all owners' property within a community association for the purpose of maintaining the common area and related administrative functions.

Building Ordinance or Law Coverage  Insurance coverage that pays for the additional cost of reconstructing a property to current building code or zoning requirements.  Example:  1965 building with 4" exterior stud walls that burns; new building code requires 6" stud walls.

By-Laws Rules and regulations adopted by an association or corporation which govern its activities.

CC&Rs  Covenants, Conditions and Restrictions are the association governing documents sometimes called the Declaration, Bylaws, Rules, Regulations, Resolutions and Articles of Incorporation.

Common Area The improved real property shared by the members of a common interest development.

Common Area - Exclusive Use or Limited A portion of the common areas limited to the exclusive use of one or more, but not all, owners. For example, awnings, decks, fences, patios, exterior doors, screens, windows and other components designed to serve a particular owner, but located in the common area, are considered exclusive use or limited common area.

Community Association  A homeowners association bound by governing documents where individual owners pay assessments for the maintenance and administration of the common area.

Condominium   A dwelling together with an undivided interest in real property. The description of the unit may include the physical boundaries, such as walls, floors, and ceilings, the entire structure containing one or more units, or a combination of both.

Cooperative - Co-op  A development in which a corporation holds title to all improved real property and the corporation shareholders receive a right of exclusive occupancy in a portion of that real property.

Developer (Declarant) The person or group who either sign the original declaration or acquire the original developer's (declarant’s) rights.

Declaration   Known is some states as the "enabling act", "master deed", "the plan of condominium ownership" or "the declaration of covenants conditions and restrictions [CC&R's]".  It describes all physical elements and defines the method for determining each unit owner's share of common areas and a formula for assessing charges.  It details what the unit owner specifically owns and both the owner's responsibilities to the association and vice versa.   It is essentially the constitution of the association.

Directors & Officers Liability Coverage  Insurance coverage that protects board members in lawsuits brought due to actions [except of negligence or criminal conduct] taken on behalf of the community association.

Easement   A right which someone has in the land of another, such as the right to cross parcel A to get to parcel B, called an "easement appurtenant"; or a public utility easement, called an "easement in gross".

Encroachment   Anything belonging to one landowner that extends onto an adjacent landowner's property is considered an encroachment. A fence that is a few inches over the property line is one example.

Encumbrance   A problem with the title to a property that does not affect the transfer of ownership.

Fiduciary  The ethical and moral obligations one person has to fulfill responsibilities to another or an institution.   In a community association, a director of the board has a "fiduciary" responsibility to act in the best interests of the association.

Governing Documents The declaration, bylaws, operating rules, articles of incorporation or other documents which govern the operation of the common interest development or association.

Guaranteed Replacement Cost Coverage    Insurance that pays for higher reconstruction cost relating to catastrophic events like hurricanes when widespread devastation coupled with labor and material shortages drive prices up.

Indemnify  To protect and defend against loss or damage, as in defend another in a lawsuit.

Joint Tenancy    A form of co-ownership whereby two or more people own land and share what is known as the right of survivorship. The right of survivorship means that when one joint tenant dies, that tenant's share passes automatically to the surviving joint tenants. The joint tenancy is a popular form of co-ownership because, as to the land so held, there is no need for a will or probate.

Lien    Any claim against a property, including mortgages, unpaid taxes or repair bills or other unpaid charges. Prospective property buyers conduct a title search to determine whether any liens against the property exist. A lien must be filed or recorded with the local county government to be attached to a property title.

Mechanic's Lien   A special right given to individuals and businesses which make improvements to real property. Mechanics include any worker or business which supplies building materials for the construction or improvement of real property, or any services such as contract, plumbing, painting and the like. In some states professionals such as architects, engineers and surveyors may also be entitled to a lien for services rendered.

Planned Development [also called PUD-Planned Unit Development]  A development (other than a condominium or cooperative) having either or both of the following features:
1. The Common Area is owned either by the association or in common by the owners.
2. The association charges an assessment to all owners to maintain the common area.

Proxy    Power granted by one person to a representative to vote and/or speak on behalf of the person.     A proxy form is often completed by an owner who is unable to attend a homeowner meeting so that a quorum can be achieved at the meeting.  The proxy can usually be assigned to anyone...a friend, relative, attorney or a member of the Board of Directors.

Quarrel  The minimum number of people it takes to hold an argument.

Quorum  The minimum number of people or owner interests it takes to hold a valid Board or Annual meeting.  The number or percentage varies according to the governing documents.  It is not always the majority.  In some situations, a minority qualifies as a quorum.

Reserves   Earmarked funds set aside by a community association for the repair and replacement of major components like roofing, paint, pavement and furniture that have a useful life of 3 to 30 years.

Reserves Funding Plan  Provides a systematic method usually by monthly assessments for accumulating the money needed to fulfill timely maintenance of major components.

Reserve Study    Identifies all components with cyclical lives for which the association has maintenance responsibility. It measures size, quantity, remaining useful life and the cost of repair or replacement of each. The study usually provides a long range plan of 20-40 years.

Resolution Process   A systematic procedure to enact and administer far-reaching, precedent-setting actions and decisions. Each resolution deals with a specific topic to define the issue and a procedure on how it will be dealt with.  Examples of common resolutions are collection of money, parking, pets and architectural control.  The formulation of a resolution incorporates input and feedback from the community members.  Once enacted, it carries the weight of law in the community binding the Board to its provisions.  There are two kinds of Resolutions: 
1. Policy Resolutions relate to the long-term management of the Association, including actions affecting members' rights of enjoyment and their obligations, and the protection of the assets of the Association and its members.  
2. Administrative Resolutions deal with the internal structure and operation of the Association, including responsibilities of committees, financial procedures, and administration of policies and rules.  

Rules & Regulations The Board is authorized to make necessary rules that are in keeping with the governing document, state and federal law.  Topics often include pets, parking, noise, architectural appearance and unit maintenance.  Rules should be clear, enforceable and few.

Schedule of Fines  A comprehensive list of fineable offenses and the amount of the fine for each.

Tenancy in Common  A form of shared ownership where two or more persons own land without the right of survivorship. Thus, when a tenant in common dies, the interest of the deceased tenant passes to the deceased tenant's heirs or named beneficiaries under the will.   See Joint Tenancy

Tenancy by the Entirety   A marital interest that is recognized in less than half the states. Where recognized, it can only be created in husband and wife, each of whom enjoy the right of survivorship as to the other.

Title to Real Estate   Ownership of land and the right to use it, with all of its rights, privileges and duties.

Title Insurance  Insurance provided by a title insurance company that reviews all recorded documents that impact the title of a particular piece of real estate.  This title "search" discloses mortgages, liens or other encumbrances on the property that would negatively impact the purchasers ownership rights.

Townhouse   A term used to describe a two or more story attached dwelling.  A townhouse owned as a home may or may not be a condominium.  With condominiums, the owner generally owns the unit interior and an undivided interest in all the buildings and real estate.  However, there are townhouses that look like condos that aren't.  

For example, in Oregon, dwellings that look very much like condos can be built under provisions of the Planned Community Act vs. the Condominium Act.  With those dwellings, the owner owns the entire structure, inside and out, plus the real estate below it and an undivided interest in common area buildings and real estate.  A condo owner owns only the unit interior plus an undivided interest in all the common area buildings and real estate. 

Units built under the Planned Community Act are responsible for both interior and exterior maintenance unless that right is specifically granted to the homeowner association.  (It usually isn't).  And while they are usually attached, they don't have to be and can be one or more stories.  

Unless these unit owners grant insurance responsibility to the homeowner association in the governing documents, each must insure their property with the same kind of insurance used by single family homeowners.  The insurance industry calls this HO3 coverage.  Condos use HO6 coverage.  The differences in the various policy coverage is significant.  For example, condo insurance does not cover structural claims.  It's extremely important that each owner and their insurance agent know what legal form of dwelling is being insured.  Since some townhouses look like condos, they are often mistakenly insured like condos.  If this mistake is made (and it's more common than you might think), the results of a fire could leave the owner uninsured for most of the damage and unable to rebuild.

Turnover Meeting  The event that marks the transition of administrative control from the community association developer to the owners.

Unit  In a condominium, a unit is usually defined as the space within a dwelling which begins at the decorated surface (sometimes starts at the wall studs and floor/ceiling joists and includes sheetrock)  including all fixtures and equipment attached to it.  Usually includes entry doors and windows. 

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