Anyone living in a homeowners association should understand the different HOA terms they might come across. Homeowners should know these terms to better acquaint themselves with HOA living, their rights, and their obligations. Similarly, board members should know these terms so they can better manage the community.
HOA Acronyms: Understanding HOA Terms
As with any industry, the HOA industry has its own terms and definitions. Those unfamiliar with HOA living or management might find it difficult to adjust to these terms, as they can be quite confusing. Fortunately, a glossary of the basic acronyms and terms can give homeowners and board members a crash course.
Here are the different HOA abbreviations and HOA acronyms to know.
HOA – Homeowners Association
What is a homeowners association? Simply put, a homeowners association (HOA) is an organization that oversees the management and operations of a community. The developer typically forms it before transferring control to the homeowners. Sometimes, homeowners can create their own HOA by filing the appropriate documents with the county and the Secretary of State.
POA – Property Owners Association
What is a property owners association? A property owners association (POA) is an umbrella term that includes homeowners associations, condo associations, and similar housing communities. It is also responsible for managing and operating a neighborhood, usually a planned one. In general, POAs oversee mixed-use developments consisting of both residential and business units.
It is worth noting that Texas law does not differentiate between a POA and an HOA. The Texas Property Code uses the two terms interchangeably, with the law on POAs also applying to homeowners associations.
COA – Condominium Owners Association
What is a condominium owners association? A condo owners association (COA) is similar to an HOA in that it is in charge of managing and operating a community. In this case, a condo association oversees condominiums buildings and units.
Due to the nature of its shared elements, managing a condominium association tends to require more expertise. The COA is responsible for more aspects of the building, such as shared roofs, balconies, exterior walls, and fixtures. For this reason, condo fees are also usually higher than HOA fees.
HOA BOD – Homeowners Association Board of Directors
What is the HOA board of directors? The HOA board is a group of volunteer homeowners responsible for managing the community. Board members oversee the association’s operations and make decisions in the community’s best interest. The board consists of homeowners who are elected by their fellow homeowners.
Gov Docs – Governing Documents
What are the HOA governing documents? The governing documents are the dedicatory instruments that establish a homeowners association’s operation, management, and restrictions. Apart from federal, state, and local laws, the governing documents dictate the rights, obligations, and operational procedures of the HOA and its members.
The governing documents of an HOA consist of:
- Recorded Plat or Community Map
- CC&Rs
- Articles of Incorporation
- Bylaws
- Rules and Regulations
It is important to note that federal, state, and local laws precede the HOA’s governing documents.
CC&Rs – Declaration of Covenants, Conditions, and Restrictions
What are the CC&Rs? The Declaration of Covenants, Conditions, and Restrictions (CCRs) is one of the key governing documents of an HOA. This document consists of legally binding restrictions and rules that apply to HOA members. The CC&R also outlines the rights and responsibilities of both homeowners and the association itself.
R&R – Rules and Regulations
What are the HOA rules and regulations? An HOA’s operating rules govern the association’s daily operations. They clarify and expound on the CC&Rs, which is why HOA rules tend to be more specific. These rules can cover a wide range of topics, including, but not limited to, pool hours, pet restrictions, trash collection guidelines, and parking regulations.
ARC – Architectural Review Committee
What is the HOA ARC? The HOA Architectural Review Committee (ARC) enforces the association’s architectural standards. This committee, also known as the Architectural Control Committee (ACC), has the following duties:
- Inspecting for architectural violations
- Reviewing, approving, and rejecting ARC requests
- Assessing and updating the architectural guidelines
- Making recommendations to the HOA board
CAM – Community Association Manager
What is a community association manager? Also known as an HOA manager, a community association manager (CAM) is someone who professionally manages associations. The community manager is responsible for the day-to-day operations of the HOA. They usually take over the administrative duties of the board, but they also have a hand in financial management, collections, maintenance, and general operations.
An HOA can hire an independent CAM or be assigned one when it enlists the services of an HOA management company. Whatever the case, it is best to look for an HOA manager certified by the Community Associations Institute (CAI).
AGM – Annual General Meeting
What is the HOA annual meeting? The annual general meeting (AGM), or the annual membership meeting, is a meeting of all the association’s members. As its name suggests, this meeting happens once a year.
Typically, the annual meeting is where HOA board elections take place. It is also when the HOA board and committees present various reports, including the annual budget, to the homeowners. At this meeting, homeowners can get a feel for the coming year and raise their concerns.
D&O Insurance – Directors and Officers Insurance
What is D&O insurance? Directors and officers insurance (D&O) is a type of insurance policy that covers the association’s directors and officers (HOA board). It is a liability insurance that offers protection should any board members face a lawsuit related to their service on the HOA board.
Other HOA Terms and Definitions
Apart from the acronyms and abbreviations, there are other key terms that homeowners and board members should understand. Here are the definitions of important HOA terms.
Articles of Incorporation
What are the articles of incorporation? The incorporation articles are governing documents containing the HOA’s legal name, address, and corporate status. An HOA files this with the Secretary of State to incorporate the association. Typically, HOAs file as nonprofit corporations in Texas.
Board Meeting
What is an HOA board meeting? A board meeting is a regular meeting of the board of directors. Board members discuss association matters at this meeting, present reports, update homeowners and vote on decisions.
In Texas, board meetings must be open to all homeowners (Section 209.0051). An HOA must send proper notice of the meeting to members.
Budget
What is an HOA budget? The annual budget is a financial tool that an HOA uses to map out anticipated expenses for the year ahead. An HOA board will also calculate the regular dues based on this budget.
Bylaws
What are the HOA bylaws? The homeowners association bylaws are another governing document that dictates the internal operations of the HOA. Homeowners will find information on annual and board meetings, term limits, election procedures, voting, and more.
An HOA typically records its bylaws. Any amendments require a vote from the membership and must also be recorded.
Common Areas
What are HOA common areas? The common areas refer to the shared elements and spaces of a community. These are areas or properties that the homeowners association owns and is responsible for.
Common areas can vary from one association to another. They usually include amenities and facilities, sidewalks, lobbies, entryways, hallways, elevators, and even private roads.
Delinquency
What is a delinquency? Delinquent accounts refer to homeowners who are behind on their dues payments. Unpaid dues can result in several consequences, including late fees or interest charges, legal action, liens, and even foreclosure.
Election
What are HOA elections? In general, elections take place every year in an HOA community. Homeowners are nominated and elected by members to fill vacant positions on the HOA board.
Every association has its own set of election rules and procedures. Most communities stagger board terms so that board positions are not all vacant simultaneously. This allows for better continuity, easier transition, and smoother operations.
Executive Session
What is an HOA executive session? An executive session is a closed board meeting. While board meetings must be open to all homeowners, the exception to this is when the board must adjourn to an executive session.
In Texas, an HOA board may hold a closed board meeting to discuss matters involving personnel, contract negotiations, confidential communications with the HOA attorney, pending litigation, and enforcement actions (Section 209.0051).
HOA Fees or HOA Dues
What are HOA fees? Homeowners may pay regular fees to the association. It is their financial obligation, as outlined in the governing documents. HOA fees, also known as HOA dues, cover the expenses associated with the management, maintenance, and operation of the community.
HOA Fines
What are HOA fines? Every homeowners association has rules that residents must follow. When a resident violates a rule, one of the disciplinary actions an HOA can take is to issue a monetary fine.
Homeowners associations may have differing fine schedules and structures. It is common for an HOA to start with a warning letter or notice at the first offense. Homeowners must also be given an opportunity to be heard before the HOA charges a fine.
HOA Management Company
What is an HOA management company? Running a homeowners association is no easy task. An HOA management company is a professional firm that provides HOA management services. Many communities enlist the help of a company to manage their day-to-day operations and administrative work.
HOA management companies come in different shapes and sizes. Some offer full-service management, which is comprehensive and includes on-site management. Meanwhile, others only provide remote management services.
Lien
What is an HOA lien? A lien secures an HOA’s right to debt payment on a property. Typically, an HOA places a lien on a home if the homeowner has unpaid fees. The homeowner must settle this lien before they can refinance their mortgage or sell their home.
An HOA lien, also known as an assessment lien, can force the sale of a home, too. This is called a foreclosure. From the foreclosure sale, the HOA can secure the funds owed by the homeowner.
Proxy Vote
What is a proxy vote? A proxy is someone who receives authority to represent another homeowner. A proxy vote is a vote on someone else’s behalf.
If they are unable to vote, homeowners might assign a proxy vote. In Texas, Section 209.00592 provides that HOAs must allow homeowners to vote by proxy.
Quorum
What is a quorum? A quorum refers to the minimum number of members who must be present before a meeting can proceed. For example, if an election at the annual meeting requires at least 50% of the voting members to be present, anything less would prevent the election from proceeding.
Quorum requirements can vary depending on the homeowners association. Board members and homeowners should refer to their governing documents for guidance.
Reserve Fund
What are HOA reserves? The HOA reserve fund consists of money set aside for future major repairs, maintenance, and replacements. This fund essentially acts as the association’s savings account.
Texas law does not require HOAs to maintain a reserve fund. That said, an HOA’s governing documents may require reserves. Even if no such requirement exists, having a reserve fund would still be wise.
Reserve Study
What is an HOA reserve study? A reserve study is a budgeting tool used to develop a funding plan for long-term maintenance and repair projects. It analyzes the association’s financial and physical condition.
This study provides the HOA with an estimate of reserve contributions every year. Although there is no law in Texas requiring HOAs to conduct a reserve study, it is a useful financial tool, and associations would be prudent to have one prepared.
Special Assessment
What is an HOA special assessment? A special assessment is an extra fee that an HOA may charge homeowners in addition to regular dues. The need for a special assessment may arise from a budget shortfall or an unanticipated expense.
Special assessments are rare. If the board plans its budget correctly, it would not need to turn to special assessments to fund association operations.
Vendor
What is an HOA vendor? A vendor is a third-party contractor or company that provides services to the HOA. Examples include maintenance companies, construction companies, and insurance providers.
Violations
What is an HOA violation? A violation is a breach of the HOA’s rules and regulations. If a homeowner violates the governing documents, they can face a number of potential consequences. These include fines, temporary suspension of privileges, and even legal action.
HOA Terms: For Your Education
Understanding the key HOA terms, acronyms, and abbreviations is essential to proper management and better HOA living. Let this serve as a glossary of terms and definitions, educating members on the various concepts and ideas related to homeowners associations.
Graham Management offers exceptional HOA management services to Houston communities. Call us today at (713) 334-8000, request a proposal, or contact us online to learn more.
RELATED ARTICLES:
- HOA Management Companies: Myths, Facts, And Industry Secrets
- HOA Board: Who Are They And What Do They Do?
- The Cost of Community: Understanding HOA Fees in Texas