What are the Different Types of Associations?
- “Community Association” is a legal entity in which the owners enjoy the protection, enhancement, and preservation of their homes and property.
- A Community Association has three defining characteristics:
- Membership in the community association is mandatory and automatic for all owners.
- Certain association governing documents bind the owner and the association to each other through mandated actions.
- Mandatory lien-based assessments (maintenance fees) are levied on each owner in order to operate and maintain the community association.
- A condominium is a form of property ownership, not architectural style, and is defined as portions of Real Estate designated for separate ownership and the remainder owned in common by all owners. There are two distinct aspects to a Condominium: the Association does not own land – common areas are owned by all unit owners in common based on a percentage established in the documents
- Homeowners Associations are generally subdivisions of single-family attached or detached homes. There are three distinct aspects to homeowners association:
- They may not automatically be subject to any specific real estate laws
- They are subject to the Colorado Common Interest Ownership Act if the community fits the definition of common interest set forth in C.R.S. § 38.33.3-103.8.
- The association owns the common areas and each owner has an easement to use the property.
- In a Cooperative, the members own stock or membership in the cooperative. Holds a proprietary lease or occupancy agreement for their living unit.
What are the Authorities & Responsibilities of the Board?
- The governing documents of most community associations provide the following authority, duties, and responsibilities for the board:
- The board is elected by the owners/members of the community.
- The board elects and directs the officers: The board makes broad policy decisions and the officers are given the authority to carry out these decisions. In many cases, the officers will be the same person as the directors.
- Like a major corporation, the board of directors will determine how monies are spent, hire and fire employees and contractors and take care of a broad range of responsibilities for the community. This is done without a vote of the members.
- The board of directors is charged with management of the association which includes:
- Running the business affairs of the association
- Establishing a budget
- Establishing good governance policies as required by CRS. § 38-33.3-209.5,
- Establishing and enforcing rules and regulations for the community and how these are enforced,
- Employing an accountant
- Employing an attorney
- Employing a manager/management company
- Employing necessary personnel for maintenance and repair
- Coordinating physical maintenance of the common areas, including the timing, scope and type of maintenance and
- Other responsibilities and policies
c/o Hindman Sanchez,P.C. Board Basics 101 Article
What is a Budget?
An annual financial plan for the Association to provide an estimate of the community’s revenue and expenses.
What are Governing Documents?
The declaration, bylaws, articles of incorporation (AOI), or other documents which govern the operation of the Association which define the property to be maintained by the Association and specify maintenance, service responsibilities and requirements.
What are Articles of Incorporation?
Articles of Incorporation bring the corporation into existence, define its basic purposes and powers, indicate whether or not stock will be issued and if board of directors will be established.
What is an Assessment?
Each HOA member is required to share the cost of common expenses. Some Associations may own no property, but may have expenses to be paid such as management fees, registering with the Secretary of State and DORA. The expenses are typically for common area property which range from amenities, clubhouses, utilities, landscaping, signage, pools, etc. Condominium Associations could include the above mentioned items as well as roofs and the exterior maintenance of the buildings as part of the HOA’s responsibility. An assessment is the owner’s financial obligation to the association.
What is a Lien?
A lien is levied against a property owner for unpaid dues or assessments after efforts have been exhausted to try to collect the amounts due. A lien is attached to the property, not the owner, and is legally recorded with the county. Placing a lien on an owner’s property protects the community association’s interests.
What is a Reserve Study?
A budget planning tool that considers the current status of the replacement fund and determines a stable and equitable funding plan to offset the anticipated of future major common area expenditures.
What is Common Area?
Real property dedicated by the CC&R’s for shared use by all members of the Association.
What is a Proxy?
The agency, function, or power of a person authorized to act or vote on another members behalf who could not be present at a meeting.
What is a Quorum?
A Quorum is defined as the minimum number of residents required to transact business on behalf of the association. The Quorum is typically established in the Associations Bylaws.
What is a Ballot?
A device used to record choices made by voters. Each voter uses one ballot, which is not shared.
What is an Executive Session?
When a board must hold a discussion or make decisions of a sensitive nature. The topics that require an executive session are typically personnel issues, contract negotiations/discussions, lawsuits/legal matters, and governing document violations.