What is a community association?
Community Associations function as a government, as a business, and as a community. As a government, the Association enforces rules, maintains order, and levies fees. As a business, the Association creates budgets, manages cash flow, and contracts with vendors. As a community, the Association provides an enjoyable quality of life for residents and enhances property values.
Community Association, or Common Interest Community, is the generic term for communities that are created pursuant to recorded covenants and which create a mandatory membership association.
All community associations have three defining characteristics:
Upon acceptance of a deed by the grantee, membership in the community association is mandatory and automatic.
The Declaration binds all members to be governed by the community association.
Mandatory lien-based assessments are levied on members in order to operate and maintain the community association.
What is the difference between a condominium owners association, a property owners association and a homeowners association?
A condominium is a form of property ownership, which is created subject to the Georgia Condominium Act. Consequently, the governing documents of the condominium must conform to the provisions of the Act.
An owner of a condominium receives a fee simple title to his “Unit,” the boundaries of which are defined by state statute and the Declaration of Condominium. The owner also holds title to the common area as a Tenant in Common with all other Unit owners. The percentage of ownership of the common property is established in the Declaration. The association does not own any of the common property; however, the association may be required to maintain some or all of the common property for the Unit owners.
Homeowner or property owner associations generally consist of single-family attached or detached residences and also include certain common property available for use by all the owners. In Georgia, these associations are not automatically subject to any state statute and are referred to as common law associations. A property owners association may be voluntarily submitted to the Georgia Property Owners Association Act (1) by vote of the membership or (2) unilaterally by the Declarant during its control of the association.
The association owns and maintains the common property; each property owner has a non-exclusive, perpetual easement to use the common property.
Who maintains the common property?
The Declaration of Condominium and the Declaration of Covenants, Conditions and Restrictions set forth the following: (1) Who owns the property; (2) Who maintains the property; and (3) Who insures the property. The person or entity, which owns the property may not be required to maintain the property. The entity, which insures the property may not own the property.
What documents control the Association and its members?
The association is governed by a group of documents, most of which are recorded in the land records of the county in which the community is located. Each document provides specific guidance regarding the governance of the community.
The governing documents:
Authorize the association to govern the members.
Provide for the operation and regulation of the association.
Provide guidance to Board members, which, if followed, will protect Board members from personal liability.
Protect association members by enumerating their rights and responsibilities.
In descending order of authority, the governing documents include:
State and Federal Statutes
Declaration of Covenants, Conditions and Restrictions
Articles of Incorporation
By-Laws of the Association
Rules and Regulations
Documents in a lesser position may not conflict with superior documents. For example, a rule may not conflict with, nor exceed, the authority of the Declaration.
How are community Associations governed?
Community associations are a representative form of government. Members of the association elect other members, through a fair and democratic process, to serve on the Board of Directors of the community. Other members serve on committees, which make recommendations to the Board and assist with special tasks.
Board and committee members are volunteer leaders who gather together in scheduled meetings to discuss and transact the business of the association. In Georgia, meeting of the Board of Directors are not required to be open meetings, unless the By-Laws of the Association so require.
The basic authority in a community association is vested in the members. The members elect directors to act on their behalf. While the governing documents delegate most of the association’s decision-making powers to the Board, the owners maintain the right, by direct vote, to (1) elect and remove directors, and (2) amend the governing documents.
Members who are dissatisfied with a decision made by the Board may not veto the decision. The members’ remedy is to elect new Board members to represent them.
Therefore, the Board has an obligation to listen to the members’ concerns and comments and to take both into consideration in making decisions for the association.
Members should attend Board meetings, participate in open forum discussions, join committees, run for election to the Board, and attend the Annual Membership Meeting. Board members should seek member input through surveys, “suggestion boxes,” and direct communication with constituents.
On what issues are the members permitted to vote?
The governing documents of the Association determine the voting rights of the members. Generally, members have the right to vote on amendments to the Declaration, elect members of the Board of Directors, remove a member of the Board of Directors and vote on amendments to the By-Laws.
What is the purpose of the Board of Directors?
Association Boards of Directors consist of volunteer members elected by the full membership of the association to represent the interests of the association and its constituents. The primary duty of the Board of Directors is to preserve, protect, maintain and enhance the common property of the community. The Board of Directors also enforces the provisions of the Declaration.
Most Associations are organized as not-for-profit corporations. Each property owner, upon acceptance of a deed to the property, is automatically a stockholder in the corporation.
The Board of Directors conducts the business of the corporation. The Board has a fiduciary responsibility to the stockholders as to the fiscal management of the association, including timely collection of assessments as well as payments made for services provided to the Association.
How many Directors serve on an Association Board?
The By-Laws of the Association state the number of Directors.
How are the Directors chosen?
The Directors are elected by the membership according to a process described in the By-Laws of the Association. If the By-Laws do not specify the election procedure, the provisions of the Georgia Non-Profit Corporation Act should be followed. During the Declarant control period, the Declarant may have the authority to appoint the Directors.
Who may serve as a Director?
The qualifications for Directors are set forth in the By-Laws of the Association.
Who decides how long each Director serves?
The Directors’ terms of service are prescribed in the By-Laws of the Association.
What is the source of the Board of Directors powers and duties?
The Declaration and the By-Laws of the Association set forth the powers and responsibilities of the Board of the Directors.
What are the powers and duties of the Board of Directors?
The primary duty of the Board of Directors is to preserve, protect, maintain and enhance the common property of the community. Generally, the Board of Directors is also authorized to: Appoint a Directors to Fill a Unexpired Term on the Board of Directors, Establish Rules and Regulations for the Members, Prepare the Annual Budget, Enter Into Contracts for Association Services, Collect Assessments and Disburse Association Funds, Establish Committees, Enforce the Provisions of the Declaration, Determine the Amount, Limits and Source of Association Insurance, Elect the Officers of the Association, Hire a Third Party Management Company, Invest Excess Funds Controlled by the Association, and Interpret the Provisions of the Declaration.
What duties do the Directors owe to the members?
Association directors owe a duty of loyalty to the members. To serve effectively, Board members must put personal preferences and circumstances aside. Decisions must be made in the best interest of the entire community, regardless of how such decisions may affect a Board members’ personal finances or preferences. Once the Board of Directors has made a policy decision, all members should support the decision and make a concerted effort to insure the success of the policy.
Association directors also owe a duty of care to the membership. The directors must act in good faith, with the diligence, care and skill of the ordinary prudent person in the same or similar circumstances. This standard, referred to as the Business Judgment Rule, requires that the Board (1) make informed decisions while exercising common sense and (2) seek the assistance of professionals on issues beyond the scope of the Board’s expertise.
How are the officers of the Association chosen?
Unless otherwise provided in the By-Laws of the Association, once elected, the members of the Board of Directors choose the officers of the Association. The By-Laws prescribe which officers are required, usually a President, Vice-President, Secretary and Treasurer. The By-Laws may also permit certain officers, generally the Treasurer and/or the Secretary, to be appointed by the Board from the general membership.
How are the officers and Directors compensated?
The officers and directors of a community association are usually volunteer positions, for which compensation is not paid.
How are committees formed?
The By-Laws of the Association and/or the Declaration may require the formation and population of “Mandatory” standing committees, such as Finance, Nominating, Compliance, and Architectural Control. The President appoints the Chairperson of each standing committee. The committee performs such functions as directed by the Declaration and advises the Board on all matters pertaining to the committee.
The Association may also form and populate other “standing” committees, such as Recreation, Social, Newsletter, and Landscaping.
From time to time, additional needs of the Association may require the formation and population of an “Ad Hoc” committee, such as a committee convened to investigate the installation of a gated entry. The President appoints the Chairperson and delegates to the committee such powers and duties required to execute the committee’s responsibilities.
A member of the Board of Directors must serve on each standing committee.
The primary function of the committee is to render a recommendation to the Board on the subject matter of the committee charter. This recommendation, once delivered to the Board of Directors, is then approved/rejected by the Board.
Committee members serve at the pleasure of the Board of Directors.
What is a Proxy?
A proxy is a Power of Attorney, which authorizes a person “to act in the place of another.” The proxy is a written document, which requires the signature of the person or entity giving the proxy. The person receiving the proxy, the “proxy-holder” must be named in the proxy. If the By-Laws so provide, proxies are authorized for voting on association business and for establishing a quorum at a meeting.
If the property has multiple owners, how many votes are cast?
Generally, each unit or lot has only one vote regardless of the number of owners. The Declaration and/or the By-Laws set forth how multiple owners determine who will exercise their vote. If the property is owned by a artificial person, such as a corporation or partnership, the entity will usually be required to give a Power of Attorney to the person exercising its vote.
How are association assessments determined?
The authority to set the periodic assessment amount is found in the governing documents of the community and in applicable state statutes. Generally, the Board of Directors adopts a budget, usually covering the Association’s fiscal year. The budget includes the projected cost to maintain and repair the common property, manage the corporation, provide the services requested by the members, and accumulate adequate reserve funds for major repairs or replacements of capital items. The annual assessments are based upon the approved budget.
Are members entitled to a copy of the association’s budget?
Each member should receive a copy of the approved budget.
Do the members have any input into the budget?
The governing documents or state statute may authorize the membership (1) to approve or disapprove the budget or (2) approve or disapprove any budget that increases assessments above a certain threshold.
How is a member’s share of the budget determined?
The Declaration specifies how each member’s pro-rata share of the budget is calculated.
May assessments be increased?
Unless the association’s governing documents limit the amount assessments may be increased during a given time period, assessments may be increased as necessary to maintain the common property and provide the services requested by the members.
What is the difference between an assessment and dues?
Assessment is the correct name for the member’s obligation to pay a pro-rata share of the budget. The term “dues” is frequently used as a synonym for “assessment.”
What is a special assessment?
The governing documents may permit the Board of Directors to levy a special assessment, in addition to regular assessments, to defray, in whole or in part, the cost of construction, reconstruction, repair or replacement of a capital improvement of or on the common property.
Does the Board have the authority to levy a special assessment?
The governing documents may require that the membership approve special assessments.
How do I obtain a copy of the association governing documents?
The Declaration is recorded in the land records of the county in which the community is located. By-Laws may not be recorded. Copies may also be obtained from the Association’s management company or from the Association’s Secretary.
Is a permit required to modify my property or its landscaping?
Most governing documents require that any exterior modifications or additions to your property or internal structural changes in a condominium unit must have prior written approval from an Architectural Control Committee (ACC). The application and approval process may take up to thirty to sixty days; therefore, do not schedule any construction work or purchase any equipment until written approval has been received from your community’s ACC.
Does the association settle disputes between members?
The authority of the Association is limited to preserving and protecting the common property and enforcing the provisions of the Declaration. Unless the dispute involves common property or a violation of the Declaration, the Association will not intervene. The Association is not a referee between neighbors.
What is common property?
Common property may include, but is not limited to, private streets and community entrance feature, including gates and gatehouse; staircases, elevators, and hallways; signs; lakes, lagoons and fountains; statuary; swimming pools and adjacent buildings; recreation sites, with associated furnishings; tennis courts and associated equipment; landscaping; walls; bridges, green belts with or without trails; parking lots; median islands in cul-de-sac streets; and centralized mail boxes.
In a POA or HOA, the association owns the common property; members have a non-exclusive perpetual easement to use and enjoy the property. In a condominium, a percentage interest in the common property is owned with other condominium unit owners as tenants-in-common; the association maintains, but does not own, the common property.
Is the association involved when property is tenant occupied?
All occupants of the property, whether tenants or owners, are required to abide by the provisions of the Declaration and the Rules and Regulations of the community. If a member leases his property, he should provide a copy of the Declaration and the rules to the tenant. The governing documents may also require that the association receive a copy of the lease agreement.
What records are members entitled to view?
The Georgia Non-Profit Corporation Act sets forth the records of the Association to which members are entitled. The following is a partial list: By-Laws and Amendments, Articles of Incorporation and Amendments, minutes, financial statements, names and addresses of Directors.
Are the names, addresses, and phone numbers of association members available to all members?
The Georgia Non-Profit Corporation Act provides that all members are entitled to the names and addresses of the other members. However, other personal information, such as telephone numbers and email addresses, are not part of the records of the Association and may not be provided to the members without the express permission of each member.