Glossary of Terms

 

Ad Hoc Committee Committee that is appointed to carry out a specific task and is disbanded when that task is completed.
Agent for Service of Process Person or firm named in the Articles of Incorporation who receives all legal notices on behalf of the association, usually referred to as the Statutory Agent.
Alternative Dispute Resolution (ADR) Methods of resolving disputes, including mediation and arbitration, other than by judicial process.
Amendment Revision of a governing document.
Annual Meeting Once-a-year assemblage of unit owners required by the governing documents to conduct association business (such as electing a Board of Directors).
Articles of Incorporation Formal document that sets up an association as a corporation under the laws of the applicable state when it is filed.  It also describes the purpose, powers, and duties of the association.
Assessments Amounts charged against unit owners (according to their percentages of ownership) to fund the operation, administration, maintenance, and management of the community association.
Association See Community Association.
Audit Examination of inventories, insurance policies, management, and financial records and accounts to verify their accuracy and determine if they adequately reflect an association’s financial status.
Balance Sheet The financial statement that indicates the financial status of an association at a specific time, listing its assets, liabilities, and members’ equity.
Board See Board of Directors.
Board Meetings Any gathering of at least a quorum of the Board of Directors for the purpose of transacting the business of the association.
Board of Directors Official governing body that is responsible for administration of the association.  The Board of Directors is elected by the members of the association.
Breach of Covenants Non-compliance with the governing documents of the association.
Budget Estimated summary of income and expenses for a given period.
Bundle of Rights The bundle of rights is defined in the deed to the property and typically contains all of the rights of ownership originally connected to that parcel.  In a condominium association, the Declaration defines these rights.
Bylaws Secondary laws of an association that govern its internal affairs and deal with routine operational and administrative matters.
Capital Expenditures Funds spent for additions or improvements to the common elements and facilities of the association.
Casualty Insurance See Liability Insurance.
Certified Public Accountant (CPA) An accountant who has met certain state legal requirements.
Chain of Title See Bundle of Rights
Common Areas See Common Elements & Facilities
Common Elements & Facilities Property owned jointly by all unit owners, that ordinarily includes land and structures not otherwise described as units.
Common Expenses Costs of managing, maintaining, administering, repairing, replacing, and operating the association.
Community Association Private organization, usually nonprofit, responsible for the total operation of communities such as condominiums, homeowner associations, and cooperatives.  The individual owners are members of the association.
Condominium Form of ownership in a multi-family housing association that combines exclusive ownership of a dwelling unit and joint ownership of common elements and facilities.
Conflict of Interest Situation in which a person has two or more interests that conflict.
Declarant The person or company who creates and files the governing documents and then develops and sells the condominium association property.
Declarant Expansion Period The period of time, beyond the initial creation, that the Declarant has to add land, units, and other improvements to the condominium association.
Declaration See Declaration of Condominium Ownership.
Declaration of Condominium Ownership The basic document recorded at a government office to set out property interests in a community association.  It also describes each unit owner’s undivided share in the common elements and facilities and restrictions on the use of the units and common elements and facilities.
Delinquency Overdue assessment payment.
Developer See Declarant.
Directors & Officers Liability Insurance Protection against loss arising out of errors in judgment, breaches of duty and wrongful acts of a Board of Directors and officers in carrying out their prescribed duties.
Disclosure Package A summary of the significant features of the condominium as well as the governing documents.  This is the package normally presented to prospective buyers by the Declarant prior to binding the sale agreement.
Easement Right to use or enter property by someone other than the owner for certain limited purposes.
Escrow Fee An extra fee charged at the closing of a sale for rendering information on the status of the unit’s account, association’s insurance coverage, closing confirmation of the account, and processing of the unit owner’s record changes.  This fee is charged by the association or management company, normally to the seller.
Exclusive Use Areas Parts of the condominium’s common elements and facilities that owners have the right to use and enjoy privately, such as patios.
Executive Session Meeting of the Board of Directors that owners are not permitted to attend.
Fiduciary Duty This duty requires the Board of Directors to act for the benefit of the community as a whole.  It is the Board’s legal obligation to protect the asset, which is the total community.
First Right of Refusal A right that may be held by the association that gives it the first option to buy a unit that is being sold.
Fiscal Year Twelve-month period for which an association plans the use of funds.
Foreclosure The taking away of the right of ownership of a condominium unit in order to pay the delinquency owed to the association.
Governing Documents Set of legal papers, filed by a declarant at the appropriate local land office, that submits land to use for, create, and govern a community association.
Homeowners Association Organization of homeowners whose major purpose is to maintain and provide for the rights of owners and maintenance of the common elements and facilities.
Indemnification Condition, usually contractual, of being protected against possible damage, loss, or lawsuit.
Insurance Protective measure that shifts risk of financial loss, due to certain perils, to an insurance company in return for payment of premiums.
Liability Insurance Coverage for damages arising out of an insured person’s legal responsibility and resulting from injuries to other persons or damage to their property.
Lien Claim or attachment, enforceable by law, to have a debt or other charge satisfied out of a person’s property.
Limited Common Areas See Limited Common Elements & Facilities.
Limited Common Elements & Facilities Physical part of a community association’s common elements that is reserved for the exclusive use of a particular unit owner or owners.
Maintenance Fees See Assessments.
Majority Vote Simple majority vote is fifty-one percent (51%) of the owners or the Board of Directors.
Management Company Firm that specializes in community association management, hired by the association to carry out the board’s policies and provide the day-to-day operation of the affairs of the association.
Mandatory Committee Group of people formed to handle ongoing business on a certain subject, as required in the Bylaws.
Master Deed Recorded instrument that describes the property involved in a community association.
Minutes Official record of the proceedings of a meeting.
Newsletter Printed periodical report devoted to news of and for the association members and others associated with the community.
Operating Budget Portion of the budget that indicates the expenses of operation for the association, other than the replacement funds.
Order of Business Formal guidelines for conducting a business meeting, usually Robert’s Rules of Order.
Organizational Meeting Meeting of the Board of Directors at which they elect the officers of the board.
Percentage of Interest See Percentage of Ownership.
Percentage of Ownership The ownership share in the common elements and facilities that is assigned to each unit by the Declarant in the Declaration.  The percentage for each unit sharing the common expenses must be the same as the ownership share for the unit.  The total percentage of all units must equal 100.
Phase Condominium A single association created over time by the Declarant.  New units are added to the project by amending the Declaration, thus changing the percentages of ownership as they are added.
Plat A drawing that is recorded in the local land records office before any units are sold.  Its purpose is to show the precise location of each unit, as well as the common elements, and define the owner’s and the community’s title to the property.
Profit & Loss Statement See Statement of Income & Expense.
Property Insurance Protection of an insured person’s real or personal property against loss or damage.
Proxy Authorization given to one person to vote in place of another at an association meeting.
Quorum Minimum number of members that must be present or votes that must be represented in or order for business to be legally transacted.
Regulations See Rules.
Replacement Expenses Costs to repair and replace existing property with property of the same material and construction.
Replacement Funds Funds that are restricted and set aside for probable repair and replacement of common elements and facilities at some future time.  These funds should be in an account separate from the operating funds.
Reserve Fund See Replacement Fund.
Reserve Study Document prepared periodically by or for the association documenting the physical condition of the property that it is obligated to monitor, the funds allocated for its upkeep and maintenance, and the forecasted annual use of those funds.
Resolutions See Rules.
Rules Statements of required, specific behavior whose violation carries a penalty.  Rules generally cover the use of and changes to the architecture or appearance of the property as well as behavior of the residents.
Special Assessment Fee levied against unit owners to cover unexpected expenses.
Special Meeting Unscheduled meeting called by the Board of Directors or owners to discuss specific, urgent business.
Statement of Income & Expense Financial report that indicates how much income has been earned and what expenses have been paid over a certain period of time.  This statement also usually compares budgeted and actual figures for the period in question and year to date.
Undivided Interest The percentage of ownership in the common elements and facilities that is attached to a unit.  This share passes with title to a unit and cannot be separated.
Unit Part of the condominium property that is subject to exclusive ownership.  The definition is specified in the Declaration.
Unit Owners Association See Association.
Voting Rights Authorization given to each unit owner to choose a specific course of action or elect a board member.  Owners have either one vote per unit or vote according to their percentage of ownership in their unit according to the Declaration and/or Bylaws.