Whether you are new to the HOA board, or are a long time veteran, it is good to stay updated on the basic terminology that is used in the area of homeowners associations. To help you stay educated and be the best representative that you can for the community, here is a list of basic terminology for HOA board members.
Perhaps this is a term that you are altogether unfamiliar with. What is more likely, however, is that you know the term, but are unsure about everything that it encompasses.
The governing documents of a homeowners association is a broad term that is used to refer to the CC&Rs (or Covenants, Conditions, and Restrictions), Community Plans, Bylaws, Rules and Regulations, and the Articles of Incorporation. Each have their own unique function in the HOA:
These documents lay out the rights and responsibilities of homeowners in the community. They outline everything from the pet policy to all of the unique restrictions relating to aesthetics and usage that your HOA adheres to.
The community plans are usually a set of maps or diagrams that show the division of properties and common areas that are part of the association.
Bylaws are the “how to” documents that provide guidance for the board on how to enforce the CC&Rs, as well as helpful information about how to conduct elections.
Rules and Regulations
These documents focus on the internal workings of the association, and include smaller, but nevertheless important, rules such as parking, pet guidelines, trash and recycling, and any number of other things that are important to the community.
Articles of Incorporation
Created at the time of the establishment of the HOA, the articles of incorporation list the name and non-profit status of the association.
Each board member has what is called a “fiduciary duty” to the other members of the community. This means that, by accepting their position on the board, they are committing to representing the community at large without undue reference to themselves. Even though board members serve on a volunteer basis, they are still expected to work for the good of everyone in good faith, just as in another business.
Even if you are not the treasurer of the board, every board member has the responsibility to know the fundamentals of your community’s budget. One of the most important accounting terms that you should know is “reserve fund,” as this is one of the most crucial aspects of the budget. The reserve fund is the money set aside for long-term goals and maintenance. This fund is especially important because it helps to prevent startling homeowners with unexpected special assessment fees.
One of the best things you can do as a member on the board is to continually educate yourself about your HOA. Knowing as much as you can about some of these basic HOA terms can help you to represent the other homeowners in your community well.