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Glossary
of Terms
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Alternative
Dispute Resolution
Also referred to as ADR. Any form of dispute resolution other than
by formal court proceedings. Can include mediation, arbitration, etc.
Arbitration
An informal trial proceeding used to settle disputes rather than pursuing
formal court proceedings. A decision by an arbitrator can be either
binding (final decision) or non-binding (parties may ignore decision).
Areas
of Responsibility
A document that outlines and defines the maintenance and/or insurance
obligations of the association and its board of directors.
Articles
of Incorporation
Documentation filed with a state Secretary of State's office which
establishes general information about a corporation and its purpose.
Assessment
A fee levied against all property within a community association for
the purpose of maintaining the common areas and related administrative
functions of the association. These are provided for in the CC&Rs
and are legally binding on the property owner. Assessments may take
the form of a regular (annual) or special (for a special project or
purpose) assessment.
Audit
The highest level
of review of an association's financial books and records. An audit
generally involves a complete reconciliation of all vouchers, charges,
and expenditures. An annual audit is normally required by the association’s
declaration.
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Ballot
A piece of paper on which an association member registers his or her
vote on a decision voted upon by the association at a called meeting.
Budget
The financial plan for an association which estimates income and expenses
for a specific time period.
By-Laws
Formal rules and regulations adopted by an association which govern
its activities and actions of the board of directors.
CC&Rs
Covenants, Conditions and Restrictions are the association's governing
documents also referred to as the declaration, rules, regulations,
or master deed. The CC&Rs are filed in the real property records
of the county in which the association is located.
Common
Area
The improved real property shared by the members of an association.
Community
Association
A property owners' association requiring mandatory membership bound
by governing documents which require individual owners to pay assessments
for the maintenance and administration of the common areas.
Community
Enhancement Fund
The Community Enhancement Fund is a special operating account created
to support quality of life programs in a community association
such as:
- Unique projects that are consistent with the spirit and focus
of the community.
- Activities that improve the physical and aesthetic environment
of the community.
- Initiatives that strengthen the community’s identity.
- Partnerships and participation of residents and businesses
in improving their community.
Funding the Community Enhancement Fund may be accomplished by a
special budget allocation, by special assessment, by a fee imposed
on all new purchasers, or by other means determined by the board
of directors and authorized by state statute or the governing documents
of the association.
Condominium
A development consisting of an undivided interest in a common area
coupled with a separate interest in a unit.
Cooperative
/ Co-op
A development in which a corporation holds title to all improved real
property and the corporation’s shareholders receive a right of
exclusive occupancy in a portion of that real property.
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Developer
(Declarant)
The person or group who either signs the original declaration governing
the development and association or acquires the original developer's
(declarant’s) rights.
Declaration
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
including payment of dues and assessments as well as the association’s
duties to the owners. It is essentially the constitution of the association.
Directors
& Officers Liability Coverage
Insurance coverage that protects the association's volunteer board
members in lawsuits brought due to their actions taken on behalf of
the association. Board members are not protected from actions proven
to be criminal or negligent.
Easement
An interest or right in real property which grants a right to a landowner
to use the land of another for a special purpose. An association may
often have an easement for slope maintenance or other repair purposes,
or a public utility may have an easement for maintenance or repairs.
Encroachment
Anything belonging to one landowner that extends onto an adjacent
landowner's property such as a fence, landscaping, etc.
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Fee Simple
Absolute title to land, free of any other claims against the title, which one can sell or pass to another by will or inheritance. This is a redundant form of "fee," but is used to show the fee (absolute title) is not a "conditional fee," or "determinable fee," or "fee tail." Like "fee" it is often used in deeds transferring title as in "Harry Hadit grants to Robert Gotit title in fee simple..." or similar words.
Fiduciary
The highest ethical and moral obligations and duty of good faith a
person is charged with for fulfilling their responsibilities. The
board of directors of a community association 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 association.
Indemnity
A contract or agreement whereby one person agrees to protect and defend
another against loss or damage.
Injunction
A request for the court to require a party to stop doing something
(or sometimes to do something) until the situation can be resolved
legally.
License
Permission granted by an owner to another for the execution of work
on the owner's land.
Lien
A monetary claim made against a property for unpaid mortgage, taxes,
contractor work, or other charges. A lien attaches to the property,
not the owner, but must be recorded in the property records of the
resident county.
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Managing
Agent
A person or entity hired to assist the board of directors in enforcing
the documents and managing the assets, including funds, of the association.
Mediation
An informal proceeding during which a neutral third person works with
both parties in a legal dispute trying to reach a resolution.
Mitigate
An attempt to alleviate trouble or cause damage to be less severe.
Motion
A formal request, usually in writing, for a hearing and decision on
a specific issue.
Net
Income
The amount of money remaining after deducting total expenses and expenditures
from total income.
Net
Loss
This
occurs when expenses are more than income.
Notice
of Noncompliance
Similar to a lien, this notice is sometimes authorized under the CC&Rs
and may be recorded in the county property records to notify prospective
buyers that the property is in violation of the documents.
Nuisance
Arises from a person’s use of their property in violation of
rules, laws, or standards which obstructs or injures the rights of
another and creates annoyance, an inconvenience, or discomfort. Examples
of nuisance can be loud noises, odors, or vehicles in disrepair on
a property.
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O
Ordinances
Laws adopted by local government at the county and city level.
Priority
of Liens
Liens are usually ranked in the order in which they are "perfected"
or recorded. As a result, "first in time, first in line"
is how liens are normally prioritized.
Proxy
A person appointed to act or vote on behalf of another person by representing
them at a meeting of the association. Also refers to the written piece
of paper granting that power.
Quorum
The minimum number of owners required to hold a meeting of the association.
The number of owners required varies according to the governing documents.
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Recuse
To temporarily remove an association member or board member or disallow
his or her participation in a particular vote or proceeding.
Remedy
/ Relief
Compensation sought by a plaintiff which can include money damages,
injunctions, etc.
Reserves
Funds set aside by a community association for the future repair of,
replacement of, or additions to major components the association is
obligated to maintain.
Reserve
Study
A study of the association’s reserve account requirements which
identifies the major components for which the association has maintenance
responsibility and their probable remaining useful life. It estimates
the cost for the components and the total contribution necessary to
finance those costs.
Review
An analysis of an association’s books and financial records that
is less stringent than an audit.
Rules
& Regulations
Rules the association’s board is authorized to adopt to implement
and interpret the CC&Rs.
Statute
of Limitations
A time period during which a complaint must be filed or it is not
recognized.
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Title
to Real Estate
Ownership of land and the right to use it.
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 purchaser’s
ownership rights.
Townhouse
A term used to describe an attached residential dwelling. A townhouse
can be a planned development on a lot or a condominium.
Tract
Map
A document recorded in the county real property records that shows
the location of all lots within a tract and provides specific descriptions
and dimensions.
Temporary
Restraining Order / TRO
A court order obtained on short notice to stop a prohibited activity.
It remains in effect until an injunction hearing can take place.
Waiver
The voluntary relinquishment of a right, claim, or privilege.
Zoning
A comprehensive system of land use controls normally reserved for
city or county governments.
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