Vocabulary every new board member should know

Documents and people that create your association

The declaration (also called CC&Rs) is the recorded document that creates the community and the association in the first place. Everything else, articles of incorporation, bylaws, rules, board resolutions, exists underneath it and cannot override it.

The declarant is the developer who recorded the declaration and, at first, controls the board. That control is legally time-limited: statutory triggers, plus whatever the declaration says, force what's usually called turnover, the handoff of board control from the declarant to the owners. The exact trigger (a percentage of units sold, a number of years) is set by your state's statute; do not assume another community's number applies to yours.

What's owned, and who fixes it

Everything in the community that is not someone's individually owned unit or lot is common element in condominium terminology, or common area in typical subdivision-HOA terminology. A limited common element is a narrower category: common property set aside for one or a few owners to use exclusively, like an assigned parking space or an attached balcony.

Who maintains what defaults to a simple split, association fixes the common property, owner fixes their own unit, unless the declaration reassigns specific items. Windows, exterior doors, and HVAC units are frequently reassigned; check your own declaration rather than assuming the default applies.

Why boards get deference, and why rules stick

The business judgment rule is the doctrine that courts defer to a board's good-faith, well-investigated decisions instead of second-guessing which option the board picked.

"Where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development's common areas, courts should defer to the board's authority and presumed expertise."

Source: Lamden v. La Jolla Shores Clubdominium Homeowners Assn., Supreme Court of California

An equitable servitude is the legal mechanism that makes a recorded declaration's restrictions binding on every owner as written, unless a challenger proves the restriction is unreasonable. It is why a board can enforce a rule uniformly without re-litigating whether it's fair to this particular owner.

Money and credential words

Exempt function income is dues, fees, and assessments an association collects from owners in their capacity as owners. It matters because Form 1120-H lets a qualifying association elect to be taxed only on income outside that category, instead of filing as an ordinary corporation. Nonprofit status under state law does not make an association tax-exempt federally; these are two separate questions.

A reserve study produces a percent-funded figure, actual reserves compared to a theoretical fully funded balance. This Course does not assert a specific "healthy" percentage; ask your reserve specialist and check your state's disclosure rules instead. Reserve study preparation has its own credential (RS), separate from the manager credential ladder (CMCA, then AMS, then PCAM), which a board can use as a checkable signal when hiring either kind of professional.