What is a community association?
A community most often is a non-profit corporation, controlled by a volunteer Board of Directors elected by the members of the Association. Their duty is to protect and maintain the community assets, and to equitably enforce the governing documents with the help of a Managing Agent.
What is the purpose of a community association?
The primary purpose of a community association is to establish an entity that will preserve, maintain, enhance and protect the value of property and amenities within the boundaries of a specific community.
How many people live in an association-managed community?
In the United States approximately 50 million people live in an association-managed community, or nearly one out of every six of us.
Where are community associations concentrated?
About 40% of all U.S. condominium associations are concentrated in Florida and California. It is estimated that more than four in five housing starts during the past 5 to 8 years have been built as part of an association-governed community.
Are community associations becoming more prevalent?
Since 1970, approximately 1 in every 3 new residential units built in the U.S. was built in a development with a community association. In virtually all major metropolitan areas, almost all major subdivisions are built using some type of community association, usually either a planned community or a condominium.
How many community associations are formed each year?
Each year, 6,000 to 8,000 new community associations are formed.
What is a “Master” Association?
Large scale planned communities establish a “Master Association” that is responsible for governing the entire community. A separate “Sub Association” may also govern individual neighborhoods within a large planned community.
What is a Condominium Association?
Legally, a condominium is a "vertical subdivision," which includes ownership of airspace to the inner walls, ceiling and floor surfaces of a resident’s unit. The building structure and the land are common areas owned by the association, to which all condo owners in the complex automatically belong.
The condominium association is responsible for maintaining the "common areas," such as the building, hallways, elevators, grounds, parking areas, plumbing, wiring and virtually everything except the owner's individual airspace.
What is a Homeowners Association?
A Homeowners Association is an incorporated or unincorporated entity which; owns real and personal property that is available for use by all lot owners within the community and has the authority to levy and collect assessments from lot owners to maintain property owned by the association and to promote the community; enforces the covenants and restrictions contained in the recorded declaration, unrecorded by-laws and duly adopted rules and regulations.
Each Homeowners Association consists of Lots upon which members have their homes and other improvements. Most new homeowner associations are mandatory membership associations. The lot owners must be members, must comply with the covenants and restrictions and must pay assessments.
The Homeowners Association actually has legal title or a deed to the common areas. Lot owners or occupants are the Members and have the right to use the common areas subject to the regulation by the Homeowners Association. In addition, you are the sole owner of the home and the land upon which it is built. This is called "fee simple" ownership.
What is common area?
The term common area is generally used to describe all elements within the community that are owned and maintained by the association, and dedicated to shared use and enjoyment of all owners.
What are deed restrictions?
Upon acceptance of a deed to property which is subject to conditions, covenants, and restrictions that “run with the land”, the owner is responsible for adherence to the provisions set forth in governing documents, which ensure rights of enjoyment and require compliance with specific restrictions.
What are governing documents?
The association’s governing documents include the Articles of Incorporation; Declaration of Covenants, Conditions and Restrictions (CC&R's); Bylaws; Association Rules; and, Architectural Guidelines.
Articles of Incorporation – State the name of the Association and the purpose for which it was formed.
CC&R's – The CC&R's provide information on each homeowner’s property rights and obligations to the association and the association’s responsibilities to the homeowners. It also details the duty of the association to collect assessments, insurance requirements, restrictions on use of the property, and architectural control issues. The CC&R's may outline the method for amending provisions of the document by the vote of the homeowners.
Bylaws – Your association may be incorporated as a nonprofit mutual benefit corporation. As such, the Bylaws establish the rules by which the corporation will be operated. They set forth how members vote for the Board of Directors, describe the election and term of office of directors, and detail the board’s powers and duties. The Bylaws also contain information on meetings of the members of the association.
Rules and Regulations – The Board of Directors has the authority to make and enforce rules that regulate behavior. Associations frequently have rules that address such activities as use of common area, parking, posting signs, and pet control. Rules and regulations are just as enforceable in an association as the CC&R's, Bylaws, and applicable laws.
Architectural Guidelines – In addition to the provisions in the CC&R's, your association has architectural standards that must be followed if you want to make any modifications or improvements to the exterior of your home or to your property. There are also State and Federal laws and statues applicable to living in your community.
What are Rules and Regulations?
Most associations have developed Rules and Regulations as provided for in the CC&R's and adopted by the Board of Directors. Rules are established to provide direction to the homeowners for common courtesies with regard to parking, vehicles, pets and pool use hours, etc.
In addition, your Association will adopt Architectural Guidelines with procedures for submitting requests to make exterior changes to your home. Such changes may include patio covers, decks, landscaping, exterior color changes or additions.
These rules and guidelines are set up to maintain the aesthetic value and integrity of the community on behalf of all owners, and hopefully protect the market value of your investment as well. Violations of these rules may result in action by the Board of Directors and a fine. In addition, if you proceed with an exterior improvement or change, without written approval of the Board of Directors, or Architectural Committee, as applicable, you may be required to remove or correct the alteration and/or be fined for the violation.
How are the CC&R's and other documents enforced?
The Association, through the Board of Directors, has the responsibility to enforce the governing documents. Typically, the Board of Directors will adopt a policy for enforcement that may include disciplinary action, including the levy of fines, to force compliance. Pennsylvania laws allow the association or an owner to file a lawsuit asking the court to enforce the CC&R’s. With some exceptions, the law requires that either the owner or the association must offer to engage in some form of alternative dispute resolution before filing a lawsuit.
What rights do I have as a member of the Association?
Generally, the rights of the owners include:
- The right to vote to elect or recall the Board of Directors in accordance with the governing documents;
- The right to vote to amend the Articles of Incorporation, Bylaws, and CC&R’s;
- The right to be elected to the Board of Directors; and,
- The right of access to certain documents of the association.
Where does the Association get the money to pay its bills?
Each association has operating expenses that include common area maintenance, utilities, insurance, legal costs, management fees, and reserves for repair and replacement. Income to cover the expenses is collected as an assessment, which represents each owner’s share of their financial obligation to the association. Assessments are normally collected monthly, in 12 equal installments. The assessment level is set by the Board of Directors who adopt a budget and distribute it to the members each year.
How are assessments determined?
Each year the association board of directors, working with Management Company if they have one, reviews the current year's expenses, makes plans for projects for the upcoming year and estimates the costs for those items. They then adopt an annual budget. Each owner is then assessed a portion of that budget, based on the formula provided in the documents, and payments are then scheduled, monthly, quarterly or annually.
What does the monthly assessment include?
The monthly assessment covers the operation, maintenance and repairs for which the association is obligated, per the governing documents. Items such as insurance, taxes, water, electricity, landscaping services, janitorial and even pest control are just a few of the items that could be covered by assessments. Assessments also cover the funding of reserves which are applied to future repair or replacement of major components for which the association is responsible, such as roofing and painting in a condominium project, pool/spa resurfacing, and clubhouse refurbishment in a planned unit development. Details for your association can be found in the budget, which is mailed to all homeowners annually.
Do I have to belong to the Association and pay monthly assessments?
Every person owning a unit or lot within a community association automatically becomes a member of the association and is required to pay the monthly assessment. Non-payment could result in a lien against the home, and eventually foreclosure.
What happens if I do not pay my assessments?
Once a year, the association will send each owner a copy of the billing procedure and delinquency policy that will tell you that the association has the right to assess interest and collection costs, including legal fees, on the balance that is owed and unpaid. The matter may be referred to the association’s attorney if the balance exceeds three months unpaid assessments. The association has a right to lien your property for the amounts owed as well as the collection costs. Ultimately, the association can foreclose and take your property for your failure to pay assessments. A personal judgment may also be entered against you. Owners who do not pay their assessments in a timely manner may put the association in financial jeopardy if it is not able to pay its bills.
Can owners review association records?
Association documents generally require the association to make its records available to an owner upon reasonable request. This means during normal business hours if the management company has the records, or at an agreed upon time, if an owner maintains the records. If you request copies of the records, you should expect to pay for the copy and/or postage costs to get them.
Who is responsible for what in the Association?
The Organizational hierarchy of an association consists of:
- Board of Directors establishes policies and procedures.
- Homeowners are responsible for paying assessments, voting in elections, and complying with the governing documents.
- Management Company executes policies and procedures as established by the Board of Directors.
- Committees research and make recommendations to the Board of Directors who then makes the final decision, i.e. Newsletter Committee, Architectural Committee, Rules Committee and Grounds Committee.
- Sub-Contractors are professionals hired by the Board to perform services for the association. The Management Company oversees the sub-contractors.
- The Auditors work independent of the Board of Directors and the Management Company in order to provide a fair and impartial audit and review of your association's finances.
An association Managing Agent is a company that is hired and appointed by the Board of Directors to implement approved policies and procedures and provide effective management and guidance for daily administrative, financial, and operational duties of the association.
What does the management company do for the Association?
Professional association management provides expert guidance to the volunteer Board of Directors in the operation and management of your community’s assets. While the Board of Directors is responsible to conduct the business of the corporation, they may delegate to management the authority to carry out the day-to-day operation of the association. The scope of services provided by a managing agent will vary based on the needs of each association. Contractual management duties may include preparation of financial statements, collection of assessments, coordination with maintenance contractors, and solicitation of bid proposals.
Pennbridge Property Management is a separate business enterprise hired to act as an agent of the association. Nor are we connected to any vendors that provide services to the association, whether they are maintenance, landscape or other service contractors.
The management staff consists of certified community association managers, each of whom have achieved both national and state-recognized designations. These designations help ensure that the manager working for your association has the knowledge, experience and integrity to provide the best possible service to your board of directors and to your association.
What types of insurance does an association need to have?
Insurance requirements vary according to your property type and governing documents. In order to protect your interests in the association, your association may purchase any or all of the following types of insurance:
- Property Damage (fire)
- General liability (common area injuries)
- Directors & Officers (questionable business judgments by your Board)
- Workers compensation (protects against financial liability caused by injury to employees, board members or volunteers)
- Fidelity Bond (protects against theft of association monies)
A Resale Certificate is a disclosure package required by law to be provided by the association upon each transfer of ownership of individual property subject to association membership. Information in the disclosure package, among other items, includes a summary of assessment account status, copies of association governing documents, certificates of association insurance, financial statements, annual budget, and a notice of pending litigation, if any.