A management company is contracted by the board of directors to provide advisement on important issues relating to the association. They report directly to the board and all decisions are made by a majority vote of the board of directors. Listed is just a sampling of some of the services provided: overseeing the day to day operations and maintenance of the association, on-site visits, preparing/maintaining financials, record keeping of all homeowners and association related business, assessments collections, oversight of routine service providers, obtain bid proposals for non-routine work, CC&R compliance, and much more.
It is important to note that the management company does not set policies or create rules and regulations for the association. Only the board of directors and the members can do this.
The assessment is the amount due from each homeowner used to pay for the ongoing maintenance and repairs to a community’s common areas, equipment, and shared amenities. Examples of services commonly included are landscape service, trash removal, pool maintenance, elevator or gate service, utility costs for common area electricity, lighting, heating/AC. Assessments are also used to pay for master insurance policies to protect the common building structures, as well as other riders as required. In addition, assessments can be used to pay for janitorial staff as well as the services of a professional association management company to manage the operations and maintenance and enforce the board’s rules and decisions.
A fiscally sound association allocates a portion of the assessments to a long-term reserve account to ensure the adequate funding for planned and budgeted renovations and repairs that do not occur on a regular basis. Examples include interior road resurfacing, roof replacement, and pool equipment replacement. They also set aside contingency funds each month to cover unforeseen expenses and emergencies. To determine the amount of long term reserves needed, a Reserve Study is completed on a timely basis. It provides an in-depth evaluation of a property’s physical components and an analysis of its reserve funds. Based on a thorough on-site inspection, a custom reserve study details anticipated renovations and repairs to common-area elements and recommends annual reserve funding to cover these expenditures for the next 30 years.
The Civil Code provides for annual increases, but not to exceed 20 percent per year without the vote of the membership. The board of directors may approve an increase if it is determined necessary to cover increased costs of operating and maintenance and to retain sufficient reserve funds.
Every year, homeowners are mailed an annual budget packet prepared by the management company at the direction of the board of directors. It includes a detailed budget for the upcoming year outlining all the income and expenses related to the association.
The maintenance and management of your association depends on the timely receipt of assessments from its members. When assessment are not received by the stated due date, the CC&Rs allows for late fees and interest to be accrued. Severely delinquent accounts may be subject to collections and or a lien placed on the property and could result in foreclosure proceedings for nonpayment. Please refer to your CC&Rs to become familiar with your property’s collection policy. If you are having difficulty paying your assessments, please contact us so that we can forward this information to your board of directors for consideration.
Governing Documents is a term commonly used when referencing the legal documents associated with your association. These may include the Covenants, Conditions, and Restrictions (CC&Rs), Articles of Incorporation, Bylaws, and Rules & Regulations. All homeowners receive a complete packet of these legal documents during the purchase of their home. Owners selling their home are required by law to disclose these documents to the buyer during the escrow period. Typically, your title company will make a formal request for them on your behalf.
Covenants, Condition and Restrictions (CC&Rs) are the governing legal documents that set up the guidelines for the operation of the planned community as a non-profit corporation. Each association is governed by its own unique rules and policies that are clearly defined in the CC&Rs. They are designed to protect property values by maintaining a clean, safe and harmonious community for all residents. Homeowners are required to follow all the conditions of the CC&Rs and non-compliance may result in fines or legal action. You received these important documents when you purchased your property. They are also available to view on the website by logging in through your homeowner login portal.
The Bylaws are the guidelines for the operation of the non-profit corporation. Bylaws define the duties of the various offices of the board of directors, the terms of the directors, the membership’s voting rights, and required meetings and notices of meetings, and the principal office of the association, as well as other items specific to the business of the association.
Most associations have developed Rules and Regulations as defined in the CC&Rs and adopted by the board of directors. Rules are established to provide direction on the common courtesies expected of all owners. Examples include parking, vehicles, pets, and shared amenities such as pool and park use. Also included will be architectural guidelines with required procedures for submitting requests to make changes to your home. Examples include exterior paint color, patio covers, significant landscape modifications and in cases were extensive interior modifications are planned. The Rules and Regulations are in place to help maintain property values and to support a cohesive and fair community for residents. Failure to follow them may result in fines, loss of privilege of shared amenities, or the removal of unapproved architectural changes.
Strong leadership is a valuable asset to the community. The association is a non-profit corporation and, therefore, required to function under the applicable laws of our state. A governing body, the Board of Directors, is required to oversee the business and represent the interest of all owners. The Bylaws contain specific information about the makeup of the board, as well as how they are elected, terms of service, and limitations and restrictions of the powers their role allows. A board typically includes a president, vice president, treasurer, and secretary. Owners in good standing are eligible to run for a position and are elected by anonymous vote of the membership, usually during an Annual Meeting. Advance notice and information about board position openings is provided to allow an equal opportunity to run for a position. Board members are responsible for making important decisions on behalf of the entire community and serve on a volunteer basis.
The frequency of board of director’s meetings vary by association but are typically held monthly, bi-monthly or quarterly, depending on the requirements outlined in the association’s Bylaws. This is where general association business is conducted and homeowners are welcome to attend. Notice of an upcoming board meeting is sent by mail, or posted on-site in your community, or noted on the courtesy assessment statements mailed to owners who use coupon books. Annual Meetings are held once a year and are open to the entire membership. Notice of Annual Meetings will arrive in the mail and will have information regarding available board positions, if any terms are expiring, and include directions on how to run for a position.