The HOA Glossary.

A community association is a nonprofit corporation formed to own, maintain, and govern property shared by its members. It is created by a recorded declaration, governed by an elected volunteer board, and funded by mandatory assessments paid by owners. Homeowners associations, condominium associations, and townhome associations are all community associations. Membership is automatic and runs with the land: buying the property makes you a member, and you cannot opt out.

Community association management serves a nonprofit corporation governed by an elected volunteer board. Its objective is governance, fiduciary compliance, reserve funding, and long-term preservation of shared assets. Property management serves an individual owner or landlord, and its objective is rental income and tenant relations. The client is different, the legal duties are different, and the skill sets are different. A firm that is good at one is not automatically competent at the other.

Common areas (in an HOA) or common elements (in a condominium) are the portions of the property owned or maintained collectively: roads, roofs, corridors, landscaping, pools, clubhouses, structural components. Maintenance responsibility for each is defined by the governing documents, and the boundary between association responsibility and owner responsibility is one of the most frequently disputed questions in association life.

A limited common element is common property assigned for the exclusive use of one or more — but not all — units. Balconies, patios, assigned parking, and unit-specific entry doors are common examples. The critical question is who pays for maintenance and replacement, and that answer comes from the declaration, not from intuition.

A managing agent is the professional firm engaged to carry out the board's decisions and administer the association's operations. The agent implements; the board governs. A management company does not set policy, adjudicate violations, or make discretionary decisions on the association's behalf unless expressly delegated authority to do so.

CC&Rs are the recorded declaration that creates the association and binds every lot or unit within it. They define what owners may and may not do with their property, what the association must maintain, how assessments are levied, and what remedies exist for violations. Because they are recorded against title, they survive the sale of a home and bind future owners. CC&Rs generally outrank bylaws and rules: where documents conflict, the declaration usually controls.

Bylaws govern the internal mechanics of the association as a corporation: board size, terms, elections, quorum requirements, meeting procedures, officer duties, and voting rights. They regulate how decisions get made, not what owners may do with their property — that is the CC&Rs. Amending bylaws typically requires a lower threshold than amending the declaration.

Rules and regulations are adopted by the board under authority granted in the governing documents. They cover day-to-day matters: pool hours, parking, pets, signage, short-term rentals. Because they can be adopted without a membership vote, they are the most flexible layer — and the most frequently challenged. A rule that exceeds the authority granted in the declaration is unenforceable, regardless of how the board voted.

A reserve study has two halves. The physical analysis inventories every common component the association is obligated to replace — roofs, paving, fencing, pool equipment, elevators — and estimates the remaining useful life and replacement cost of each. The financial analysis compares that schedule against current reserve balances and annual contributions. The gap between them is the association's true financial position, and it is the earliest reliable warning of a coming special assessment.

Percent funded expresses the association's reserve balance as a share of what it should hold today given the age and cost of its components. Above 70% is generally considered strong; between 30% and 70% carries moderate risk; below 30% carries a materially elevated risk of special assessment or deferred maintenance. It is the single most useful number on a reserve study, and most boards have never been shown it.

A special assessment is a charge levied on owners outside the regular budget, typically because a major component failed and the reserve fund could not cover it. Special assessments are rarely a surprise in hindsight — they are almost always the arithmetic consequence of years of underfunding. The authority to levy one, and any membership vote required, is set by the governing documents and applicable state law.

The operating budget covers recurring annual expenses: insurance, utilities, landscaping, management, snow removal, routine repairs, and administrative costs. It is funded by regular assessments and is separate from reserves. A budget that balances only because reserve contributions were cut is not a balanced budget — it is a deferred one.

Assessments are the mandatory payments each owner makes to fund the association. They typically cover both operating expenses and reserve contributions. They are not optional, not a fee for services rendered, and not contingent on whether an owner uses the amenities. Unpaid assessments generally become a lien against the property, and in most states the association can eventually foreclose on that lien.

A resale certificate (in some states, an estoppel certificate) is the disclosure package provided when a home in an association is sold. It typically discloses the assessment amount, any delinquency on the account, pending special assessments, reserve balances, litigation, and governing documents. It is the buyer's clearest window into the association's financial health, and a sophisticated buyer reads it closely.

A delinquency policy sets out the schedule and method by which the association pursues unpaid assessments: when notices go out, when late fees and interest attach, when the account is referred to counsel, and when a lien is recorded. The value of a written policy is uniformity. Collections applied inconsistently invite the same defenses as enforcement applied inconsistently.

Board members owe the association a fiduciary duty — generally understood as duties of care, loyalty, and good faith. In practice this means making informed decisions, acting in the association's interest rather than personal interest, following the governing documents, and avoiding self-dealing. Boards are usually protected by the business judgment rule when they act on reasonable information through a proper process. That protection depends heavily on the record.

The business judgment rule generally shields directors from liability for decisions that turn out badly, provided they acted in good faith, without conflict of interest, on reasonably adequate information, and through proper procedure. It protects the process, not the outcome. A board that never documented what it knew or why it decided has given away the protection.

Selective enforcement occurs when an association enforces a restriction against one owner while tolerating the same violation by others. It is one of the most common and most effective defenses raised against an association, because it undermines both the fairness and the reliability of the covenant. Consistency is not a courtesy. It is what makes enforcement legally durable.

Architectural review is the process by which an association evaluates owner requests to modify the exterior of a home or lot — paint, fencing, additions, landscaping, solar. The authority, the standards, and the response deadlines come from the governing documents. Unwritten standards and missed deadlines are the two most common ways an association loses an architectural dispute.

Quorum is the minimum number of members or directors who must participate for a meeting to conduct valid business. Without it, votes taken are not binding. Failure to reach quorum at annual meetings is one of the most common governance failures in community associations, and it is usually a symptom of poor communication rather than owner apathy.

Developer transition is the point at which control of the board passes from the developer to the owners. It is the single highest-leverage moment in a community's financial life. The incoming board should demand a complete records handoff, an independent reserve study, a transition inspection of common components, an audit of association finances, and a clear accounting of any developer subsidy that is about to disappear from the budget.

Deferred maintenance is work that should have been performed but was postponed, typically to avoid a dues increase. It does not save money. It converts a scheduled expense into a larger, urgent one, and it usually increases the eventual cost through collateral damage. Functionally, it is a loan at an interest rate no one voted on.

A capital improvement adds something new or materially upgrades an existing component, as opposed to a replacement, which restores an existing component at the end of its useful life. The distinction matters: replacements are typically funded from reserves, while improvements often require a membership vote and a separate funding source under the governing documents.

Directors and officers insurance protects board members against claims alleging wrongful acts in their capacity as directors — typically defense costs and damages. Coverage varies widely, and many policies exclude the claims associations most often face, including certain construction defect and discrimination claims. Boards should read the exclusions, not just the limits.