Nov8

Important Association Management Terms You Should Know

HOA living is full of specialized jargon. As the industry progresses, more terms emerge and old terms evolve. Not knowing for certain what specific language means can restrict your understanding of a particular document, which can get frustrating fast. As part of our ongoing effort to provide useful HOA management resources for homeowners, here’s a handy guide to some of the most important association management terms.

Management Company

A management company is a third party that is hired by an HOA’s board of directors to carry out all of the decisions made by board. The management company is not the HOA, nor is it the board. The management company cannot directly make any decisions on behalf of the association. They can only act as the association’s agent and as explicitly directed by the board.

Though part of the management company’s job is to enforce the rules and regulations set forth by the board, the bigger aspect of the position is to build a stronger sense of community and support the smooth operation of the HOA. The management company is represented by a property manager or team of managers who act as the interface between the board and association members.

Board of Directors

The board of directors (or sometimes, “board”) is a group of volunteers that have been elected by the members of the association. They are the “face” of the association and their primary function is to act as fiduciaries of the corporation and within the authority of the governing documents.

Just the like board of any corporation, all decisions require a vote. Therefore, no single board member can act unilaterally unless explicitly given this authority by the entire board. All actions must be recorded and — with the exception of the executive session meeting  a record of all of the board’s actions and decisions is available to the membership.

Member/Membership

This is simply another term for a homeowner within the community who is not on the board. All members have a stake in the association, since the direction of the association is an influencing factor on property values. Members implement their influence by exercising their right to vote for the board of directors, or by voting for allowed items under their governing documents. All members should take this responsibility seriously.

Board Meeting

There are two types of board meetings, one public and one that takes place in a closed session.

Regular Session – This is normally what is thought of as a “board meeting”. Open to all members of the association, the regular session is where all of the HOA’s operational decisions are made. The regular session usually includes an open forum, where members (homeowners) are given the opportunity to speak freely on any topic related to the association. It’s important to note that all board meetings are agendized; therefore, if a topic isn’t part of the agenda before the commencement of the meeting, a decision will not be made during that meeting. However, during the open forum, a member may request that a particular topic be added to the next regular session agenda.

Executive Session – This is a private meeting of the board that is not open to the membership. Details of the executive session are not recorded in the general session minutes — only the subjects that were discussed. Topics that are covered during the executive session include sensitive subjects such as legal issues, contract reviews and HOA personnel problems.

Assessments

“Assessment” is the official term for “dues”. Many association members don’t have a clear understanding of what, exactly, their dues pay for. We have an in-depth article that covers the topic of dues more thoroughly, but for a simple understanding, think of it this way: if you draw a map around the perimeter of your own property, your dues pay for everything in your HOA that falls outside of that line, called “common area”. These are things like: trees, landscaping, irrigation, pools, recreational centers, sports complexes, street lights, entry gates, trails, main office supplies and utilities, and community events. These responsibilities are covered in your association’s governing documents.

Every HOA is different, so assessment amounts — and their applications — will vary. HOAs are non-profit mutual benefit corporations, which means that all monies collected must be disbursed back into the association. By law, the membership is entitled to review the association’s annual budget.

This is just the tip of the iceberg regarding HOA vocabulary. The most comprehensive set of HOA management resources can be found at Davis-Stirling.com, named for the Davis Stirling Common Interest Development Act. This is the section of California Civil Code that outlines the rights and responsibilities of homeowners associations within the state. As always, if you have questions about these phrases — or any other aspect of your HOA — your property manager can help.

Need some assistance understanding your governing documents? Our experienced property managers can explain what each document means and why it’s important.

Posted by on | Categories: Community Management, HOA Management.

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