While living in a homeowners’ association (HOA) has countless benefits, getting up to speed with the language and mastering the terminology can be daunting. The following are ten commonly used HOA terms every resident should know and what they mean.
1. Board of Directors
To function correctly, an HOA is required to have a board authorized to act on a community's behalf. Board members are volunteers who are elected into the position by other members of the association to help create and enforce community guidelines and maintain shared spaces. Main board officer positions include a board president, vice president, treasurer, and secretary.
“Communities and associations are non-profit businesses that are run by a board of directors that makes the decisions.” - Heather Dombach, CMCA®, Associa Mid-Atlantic
2. Fiduciary Responsibility
Fiduciary responsibility means the board has an ethical and moral obligation to make decisions for the benefit of everyone in the community, not just for a single home.
“In a nutshell, when you’re a board member, you need to act for the good of the community as a whole and not for yourself. You have a duty to make decisions for the benefit of all, instead of just your home or your friend’s homes nearby.” - Jesse Dubuque, CMCA®, Associa Minnesota
3. Community Management Company
A community association management company, or HOA management company, is often contracted by the board to help fulfill duties they cannot carry out. Typically, these companies help support maintenance, accounting, and other community efforts, depending on the association's needs.
“Everyone–the board, management, and the membership–work better when we all see that we’re on the same team, with the same objectives. Often, associations have a lot of internal grievances because there’s an ‘Us vs. Them’ mentality.” - Haley Murphy, CMCA®, AMS®, The Prescott Companies
4. Community Association Manager (CAM)
The community association manager (CAM) is the face of the HOA management company. You may see your manager around the community, at meetings, or when you pay your HOA fees. They work closely with the board to perform many basic functions and resolve any complaints or issues that come up along the way.
“A CAM should be a consultant figure and should provide information and advice to assist the board in making decisions. A CAM should be the one to make recommendations and subsequently carry out the decisions of the board.” - Emily Ramirez, Colorado Association Services
A committee is a small group of people focused on specific community aspects that may require additional oversight, planning, and execution. Committees allow homeowners to get involved and help reduce the workload of the board.
“Creating committees allows others to get involved without the pressure of being on the board, while also reducing the board’s workload. For example, if the board needs a new landscaper, they can appoint a committee to develop landscaping specifications and interview companies that management has vetted through the vendor approval process.” - Kelly Zibell, PCAM®, CMCA®, AMS®
6. Governing Documents
This collection of documents includes the declaration, bylaws, operation rules, articles of incorporation, and other materials which govern the day-to-day operation of the HOA.
“Governing documents are, in essence, the constitution, law, and regulations that spell out how your community is governed. Although the terminology varies from state-to-state, the general hierarchy of governing documents tends to follow similar structures.” - Andrew Fortin, SVP, External Affairs
A quorum is the minimum number of owners needed to hold a meeting for the association. Having a proper quorum is critical anytime an HOA board wants to conduct official business, change rules, or vote on new board officers.
“Don’t forget to show up to the board meeting. [Failing to meet quorum] reflects a lack of commitment to the board, to the association, and to the owners that live in your community, and it can cause distrust between board members. It can also delay very important, time-sensitive decisions.” - Erin Baker, Chief Client Officer, Professional Community Management, An Associa® Company
8. Reserve Fund
An HOA reserve fund is money set aside by a community association for additions to major components the association is obligated to maintain and future replacements and repairs that don't occur on an annual basis.
“The board is required to budget and fund a reserve account, which takes care of necessary capital improvements, such as parking lot resurfacing, new roofs, and painting. This is needed, as the budgeted operating account is only used for day-to-day operations in a community.” - John Hensley, President, Associa Gulf Coast
HOA fees, sometimes referred to as assessments, are fees all association members are legally required to pay. Depending on the governing documents and procedures, they can be collected annually, quarterly, or monthly.
“These fees are the primary source of income for an association and are used to ensure the association can successfully perform the various duties and tasks for which it’s responsible. What HOA fees cover depends on the community, but typically, this money is used to pay for repairs, maintenance, administration, and reserve funds for future repairs and improvements.” – Julian White, Director of Business Development, Real Property Management, An Associa® Company
When an HOA rule or regulation is violated, a fine can be issued. HOA fine amounts vary and will depend on your community's governing documents and other local and state laws that regulate fees.
“Fines need to be commensurate with the violation. A reasonable fine for improper storage of personal items on balconies is $25. A reasonable fine for replacing a window without architectural control is not anywhere near $25.” - Michelle Boeck, CMCA®, AMS®, PCAM®
Back to the Basics: A Beginner’s Guide to HOAs
As the industry leader in community management, at Associa, we know that new residents in an HOA often find it difficult to navigate the processes, rules, and regulations of association living. Understanding how an association functions is important for your investment and quality of life. Read our ebook, “A Beginner’s Guide to HOAs,” to learn everything from HOA basics to the benefits of living in one and much more.