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There are thousands of community associations and many of them are full of owners who are unaware of how their association functions. This post provides the information owners should know in order to understand the most important community association basics. 

 

Characteristics of a Community Association 

· All owners become members of a community association when they accept a deed to a lot or unit located in a community association. 

· The governing documents (i.e. CC&Rs, articles of incorporation, bylaws and rules and regulations) create obligations on the part of the homeowners and the community association. 

· Most community associations are established as non-profit corporations and are subject to the laws affecting non-profit corporations. 

 

Types of Community Associations 

· Condominiums: In a condominium, the owner owns a separate interest in the unit or apartment together with an undivided interest in the common area. 

· For example: If there are 50 units in a condominium association, each owner owns his or her individual unit (usually the airspace within the walls of the unit) plus 1/50th of the common areas. 

· Planned Community: An individual owns and interest separate from the other owners, usually called a lot, parcel or residence. In some states, the association (not the owners) owns the common areas in a planned community. 

 

The Legal Documents Regulating Community Associations 

The legal documents that regulate community associations have provisions that are binding on both the community association and the individual owners. The controlling legal documents for a community association are the plat, declaration of covenants, conditions and restrictions (CC&Rs), bylaws, articles of incorporation and rules and regulations. 

· Plat: The plat for a community association identifies the lots/units subject to separate ownership and the common area. The plat must be approved and recorded with the county recorder. 

· CC&Rs: The CC&Rs are the enabling document that creates the covenants and restrictions that run with the land and are binding on all current and successive owners. This document is recorded with the county recorder’s office before an owner purchases a lot/unit in the community association. 

· Articles of Incorporation: The Articles of Incorporation establish the association as a legal entity with the state Corporation Commission. Incorporating a community association limits the liability of individual members for the acts of the association. 

· Bylaws: The Bylaws are used for the internal government and operation of the association. The Bylaws typically define the composition and election of the Board of Directors, notice and quorum requirements for meetings, administrative procedures and rules for the association. 

· Rules and Regulations: The Board is usually empowered in the CC&Rs or Bylaws to adopt rules and regulations regarding the community association’s common areas or areas not generally covered by the community association’s CC&Rs. If rules and regulations conflict with the CC&Rs and Bylaws, the rules and regulations are unenforceable. Rules and regulations must be reasonable, easy to understand and efficient. 

 

There is a hierarchy of these legal documents. The hierarchy is: plat, CC&RS, articles of incorporation, bylaws, and rules and regulations. In the event of a conflict between the documents, the document earlier in the hierarchy prevails or trumps over the other document. 

 

Key Figures in a Community Association 

Community associations are composed of several different groups of people working together to manage the association. It is important for owners to know what roles these figures play in the association. 

· The Developer: The developer (also known as the declarant) is in control of the association during the early stages of community development. The developer prepares the governing documents and creates structure for the community association. The developer creates the original budget, basic administrative procedures, maintaining financial legal, lot/unit owner’s records, and all documents pertaining to the community association. Once a certain percentage of the lots/units are sold, the developer transfers control of the community association to the owners. 

· The Board of Directors: The Board of Directors manages the community. The Board is granted authority and an obligation to act in the best interest of the association by the governing documents and local state laws. The board has a fiduciary duty to act in good faith in the best interest of the association with such care that a reasonably prudent person would act in the same position under similar circumstances. Owners should review the governing documents and state law so they are familiar with the powers and obligations the board has been entrusted with. 

· The Officers: The governing documents (usually the Bylaws or Articles of Incorporation) have provisions which relate to officers. Officers of associations are usually elected by the Board of Directors. The board consists of the offices of: President, Vice-President, Secretary and Treasurer. 

· Committees: The governing documents usually authorize standing committees and authorize the board to appoint committees. Committees assist the board in gathering information, making recommendations and they contribute valuable input on decisions by gathering members’ views. An architectural review committee is an example of a typical committee. 

· Management Companies, like The Management Trust: The management company or manager’s duties for the association depend on the requirements of the association. Typically the management company with perform the following duties with the help of a designated manager: initial collection of assessments; violations; financials and budget; maintenance of all records; preparation for regular and annual meetings; and correspondence with owners. 

· Association members (aka: you!): Association members have rights and obligations while living in a community association. Some examples of members rights are: to elect board members; to amend the CC&Rs and raise assessments; to review records of the association as allowed by state law; to be given reasonable notice of CC&R violations and an opportunity to respond prior to assessment of fined; to ask questions. Examples of member’s obligations are: to adhere to the community association’s documents; to pay assessments on time; to participate in the community association; to maintain their homes; and to stay informed about community association activities. 

 

It is important that owners understand their position, rights and obligations within their association. Make sure you read your governing documents so you understand your rights and obligations. Informed owners help the association function as they were meant to; to create a great place to live!