GLOSSARY and TERMS

Definition: Arrears

Money that is owed and should have been paid earlier.

 

Definition: HOA

When you bought into the Cobblestones at Chestnut Hill you automatically became a member of its HOA or Homeowners Association. You are required to pay dues and any special assessments.

 

Definition: HOA Dues

Your dues keep the lights on the paths and parking lots on, the water flowing into our homes, the snow cleared, the trash removed, and the lawns cut and beautified. Your dues pay for repairs to common elements like our pitched roofs, stucco exterior. It also helps to build a healthy reserve in the event of a major repair or renovation is needed.

It is recommended that all homeowners at the Cobblestones prioritize this bill monthly. Doing so keeps your and our investment growing.

 

Definition: HOA Reserve Study

A reserve study is a study made of all the major capital systems in the association. It evaluates how much life they have left and how much they’re likely to cost when they wear out. From that, you can calculate how much money the association has to set aside each year to have enough to replace those items when they do wear out.

 

Definition: HOA Special Assessment

It is important for The Cobblestones to have a specific amount in our capital reserve fund and that money comes from a special assessment.

The Executive Board, working with management must look at everything from infrastructure repairs and improvements to delinquencies, legal action, and contract negotiations when considering an HOA special assessment.

The Executive Board should explain in a report why such money is needed, where previous funds were spent, and how it plans to reach the community’s financial goal.

 

Definition: Declaration of Covenants, Codes & Restrictions (CC&Rs)

The declaration of covenants, conditions, and restrictions (CC&Rs) are recorded with the register of deeds in the initial phase of development of a townhome or planned community.

The CC&Rs govern what an owner may, may not, or must do with respect to the real estate. In them, you’ll typically find things like a description of the property covered by the CC&Rs, language establishing an HOA, a protocol for levying annual and special assessments for common expenses, and a description of the common areas and amenities.”

The governance of the HOA corporation belong in the HOA bylaws, not the CC&Rs.

 

Definition: HOA Bylaws

HOA bylaws are governing guides. Bylaws are supposed to be about the government of the corporation. They should cover things like how often you have meetings, how many people are on the board, how often you have to have membership meetings, and what’s a quorum.

 

Definition: Lien

A lien is a financial claim to property to secure a debt.

When a lien is filed, property is said to be “encumbered by” a lien.

If property is encumbered by a lien it can’t be sold until the lien is “satisfied,” which means that the debt must be paid off. A lien can be satisfied with a portion of the proceeds of a sale or refinancing.

A lien is filed with the land records office of the county in which the property lies.

Liens are paid out in the order filed. For this reason, if your HOA is owed money by a homeowner, it is prudent to file your lien first, and work through payment options with the homeowner after the lien has been filed.

If an encumbered property is transferred to another owner rather than sold, for example, after the original owner dies, the lien transfers to the new owner.

 

Definition: Quorum

A quorum is the smallest number of board members necessary to legally conduct the business of your HOA. Most, but not all, groups define a quorum as a simple majority of the members. It should be defined in your HOA’s bylaws.

Without a quorum, a vote cannot be taken, and the status quo can’t be changed.

Unless a quorum is present, minutes should note be taken since official business of the HOA cannot be conducted.

Opponents to a proposal that would change the status quo can block the proposal by walking out of a meeting or not attending in the first place.

Usually, the rule that defines a quorum ignores any vacant seats. In this case, if a simple majority is required to have a quorum, and there are seven board seats, but there are only four members, all four would have to be present to conduct business.