Glossary of Homeowner Association Terms
Authored by attorney, Michael Chulak
Agent refers to someone authorized by another (principal) to act for or in place of the principal; one entrusted
with another's business.
Alternative Dispute Resolution means mediation or arbitration as opposed to litigation.
Appurtenant means belonging to, or connected with the use of something.
Articles of Incorporation is a document filed with the state which sets forth general information about a
corporation. The filing of this document creates the corporation. Specific rules of the corporation are contained in the
Assessment is the fee or dues payable by members of an association, usually monthly. Assessments are determined
annually in advance by the board of directors as part of the budgeting process.
Association means a non-profit corporation or unincorporated association created for the purpose of managing a
Board of Directors is the governing body of a corporation such as an association. The board is elected by the
members of the association who elect the officers. The directors and officers have a duty to comply with the governing
documents of the association and all applicable laws.
Board Meeting includes any congregation of a majority of the board members at the same time and place to hear,
discuss or deliberate upon any item of business scheduled to be heard by the board, except those matters that may be discussed in
Bylaws are the rules adopted for governing a corporation such as an association. The bylaws address such things as
elections of both directors and officers, the holding of meetings, rights to notice and the powers of directors and
CC&Rs (See Declaration.)
Common Area(s) means the entire common interest development except for the separate interests. California law
association to maintain the common areas other than exclusive use common areas unless otherwise provided for in the CC&Rs.
The common areas typically include, but are not limited to landscaped areas, driveways, pools and elevators.
Common Interest Development means any of the following:
- A condominium project,
- A planned development, or
- A stock cooperative
The distinction between a condominium and planned development is very significant as it relates to the issue of termites and
Condominium consists of an undivided interest in real property, which is the common area, coupled with a separate
interest in space called a unit, the boundaries of which, are described in the condominium plan.
Under California law, condominium associations are responsible for the repair and maintenance of the common areas
occasioned by the presence of wood destroying organisms (termites and dry rot) unless the CC&Rs indicate otherwise.
Condominium Plan means a description of a condominium project indicating all dimensions in sufficient detail to
identify the common areas and each separate interest. The condominium plan is a recorded document.
Co-op See Stock Cooperative.
Coop See Stock Cooperative.
Davis-Stirling Common Interest Development Act refers to sections 1350 through 1376 of the California Civil Code.
These sectors along with other sections of the California codes deal with common interest developments.
Declarant means the person or persons who signed are established the CC&Rs. This is nearly always the builder.
Declaration or CC&Rs (Covenants, Conditions and Restrictions) is a recorded document that sets forth the
restrictions on the
use or enjoyment of any portion of the common interest development that are intended to be enforceable equitable servitudes.
Unless the Declaration states otherwise, these servitudes may be enforced by any owner of a separate interest or by the
association, or by both.
Directors & Officers Liability Coverage is insurance coverage that protects board members in lawsuits due to actions
taken on behalf of the homeowner association. It also covers errors and omissions by board members.
Easement means the right that someone has in the land of another, such as the right to cross Parcel A to get to
Employee is a worker that performs services subject to the will and control of the employer, both as to what will be
how it will be done. The employer establishes hours of work, may provide training and the worker may not assign anyone to do
the required work.
Exclusive Use Common Area(s) is a portion of the common area designated in the CC&Rs for the exclusive use of one or
more, but fewer than all of the owners of separate interests.
Unless the CC&Rs provide otherwise, the following are exclusive use common areas:
|5)||Exterior door frames and hardware||11)||Windows|
|6)||External telephone wiring designed|
to serve a single separate
California law requires the owner of the adjacent separate interest to maintain the exclusive use common areas.
Executive Session refers to a confidential portion of a board meeting. Refer to Open Meeting Act.
Fiduciary means the legal, moral and ethical obligations a person has to fulfill responsibilities to another.
In a homeowner association, directors of the association have a fiduciary duty to act in the best interests
of the association.
Governing Documents means the CC&Rs, Bylaws, Rules and Regulations and Articles of Incorporation (or Articles of
Housing Cooperative See Stock Cooperative.
Independent Contractor is a worker hired to do a specific job over which the employer has no right to control the
manner in which the work is done. The worker is generally licensed and offers services to the public. Independent contractors
establish their own hours and receive no training. Independent contractors are free to assign work to others, if they
determine to do so.
Insurance Coverage Forms
|1)|| Guaranteed Replacement Cost Coverage with Full Building Code Upgrade is insurance
replacement costs without
regard to policy limits and includes costs resulting from code changes. The amount of recovery will be reduced by any
|2)|| Guaranteed Replacement Cost Coverage with Limited or No Building Code Upgrade is
pays replacement costs
without regard to policy limits, but limits or excludes costs resulting from code changes. The amount of recovery will be
reduced by any deductible.|
|3)||Replacement Cost Coverage is insurance that pays replacement costs up to policy limits based
upon like or
equivalent construction. The amount of recovery will be reduced by any deductible. |
Lien is a recorded claim against a property, including Assessment Liens, Deeds of Trust and unpaid taxes.
Management Agreement is the contract between an association and management company setting forth the rights and
the parties. These agreements may be “full service” or “financial service” contracts. Some management companies provide more
services than others.
Mechanics' Lien is a right provided by law to individuals and businesses that make improvements to real property and
who are not paid. Mechanics include any worker or business that supplies building materials or labor for the construction or
improvement of real property.
Meeting of Board. See Board Meeting.
Open Meeting Act refers to the Civil Code Section that permits any member of an association to attend board
when the board adjourns to executive session to consider litigation, matters relating to the formation of contracts with third
parties, member discipline, personnel matters, or to meet with a member, upon the member’s request, regarding the member’s
payment of assessments.
Operating Rule means a regulation adopted by a board of directors that applies generally to the management and
operation of the common interest development or the conduct of the business of the association.
Planned Development means a common interest development other than a condominium, or stock cooperative. The common
often owned by the association, however, it may also be owned in common by the owners of the separate interests. The separate
interest is a lot, parcel, area or space, not a unit.
Under California law, in a planned development, each owner of a separate interest is responsible for the repair and
maintenance of that separate interest as may be occasioned by the presence of wood destroying organisms (termites and dry rot)
unless the CC&Rs indicate otherwise.
Proforma Budget is an annual budget for the association setting forth the estimated revenue and expenses along with
of the association’s reserves based upon the most recent reserve study. A copy must be distributed to all association members
not less than 30 days nor more than 90 days prior to the beginning of the association’s fiscal year.
Proxy is the power granted by one person to a representative to vote for the person. A proxy form is often
completed by an owner who is unable to attend a homeowner meeting so that a quorum can be achieved at the meeting.
Reserve Study is a written report which identifies all of the major components which the association
is obligated to repair, replace, restore or maintain having a remaining useful life of more than two years and less than 30
years as of the date of the study. The report estimates the remaining useful life of each component and the amount of funds
the association must set aside each month (Reserves) in order to have the cash available to make all necessary repairs and
replacements. It is a cash flow report. California law requires most all associations to obtain a reserve study at least
every three years.
Reserves are the funds set aside for repairs and replacements to be made by an association as determined by a
Separate Interest has the following meanings:
|1)|| In a condominium project, “separate interest” means an individual unit or separate
interest in space.
|2)|| In a planned development, “separate interest” means a separately owned lot, parcel,
area or space.”|
|3)|| In a stock cooperative, “separate interest” means the exclusive right to occupy a
portion of the real property.”|
With both condominiums and planned developments, the transfer by sale or foreclosure of a separate interest, includes the
automatic transfer of the owner’s undivided interest in the common area or membership interest in the association. Under
California law, the owner of each separate interest is responsible for maintaining it.
Special Assessment is an assessment made usually for a special project or in response to a large unbudgeted
Stock Cooperative is a project in which a corporation is formed for the purpose of holding title to the property and
shareholders of the corporation receive a right of exclusive occupancy in a portion of the property (either an apartment,
space or home site). The shareholder’s interest in the corporation is evidenced by a share of stock or a membership
Structural refers to the load-bearing components of a building as opposed to the screening or ornamental elements.
Structural lumber is generally, at least a 2 x 4.
Townhouse is not a legal form of ownership. It is an architectural style. Townhouses may be condominiums or
planned developments. Townhouses are multi-level homes, usually built in rows with individual garages. The homes are not
stacked one on top of another so that no owner lives above or below another owner.
Undivided Interest refers to the type of ownership interest that the owner of a separate interest has in the common
a condominium or planned development, this undivided interest consists of a tenancy in common which means that each owner
having an undivided interest may use all or any portion of the common area, subject to any restrictions set forth in the
Declaration or CC&Rs.