This glossary of homeowner association (HOA) and common interest development (CID) terms was prepared by the law firm of Michael T Chulak & Associates for non-attorneys to assist them in the management of their community associations. This HOA and CID glossary is general legal information only and is not intended to be legal advice. If you need legal advice, you should consult with an attorney licensed in your state.
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
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
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 bylaws.
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
Association means a non-profit corporation or
unincorporated association created for the purpose of managing
a common interest development.
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 executive
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 officers.
Common Area(s) means the entire common interest
development except for the separate interests. California law
requires the 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
Common Interest Development means any of the following:
1) A condominium project,
2) A planned development, or
3) 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.
|Davis-Stirling Common Interest
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
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 done and 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)
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:
4) Exterior doors
5) Exterior door frames and hardware
6) External telephone wiring designed to serve a single separate
12) Window boxes
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
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.
1) Guaranteed Replacement Cost Coverage with Full
Building Code Upgrade is insurance that pays replacement cost,
without regard to policy limits and includes costs resulting from
code changes. The amount of recovery will be reduced by any deductible.
2) Guaranteed Replacement Cost Coverage with Limited or No Building
Code Upgrade is insurance that 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
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
obligations of 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.
Open Meeting Act refers to the Civil Code Section
that permits any member of an association to attend board meetings,
except 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 area
is 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 a
summary 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 reserve
Separate Interest has the following meanings:
1) In a condominium project, “separate interest”
means an individual unit or separate interest in space. See “Condominium.”
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
Special Assessment is an assessment made usually
for a special project or in response to a large unbudgeted expense.
Stock Cooperative is a project in which a corporation
is formed for the purpose of holding title to the property and
where the 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 certificate.
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
Undivided Interest refers to the type of ownership
interest that the owner of a separate interest has in the common
area. In 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.