Frequently Asked Questions
What is a common interest development (CID)?
A CID is descriptive not only of a certain type of real estate and form of home ownership, but also of a lifestyle that is becoming more and more common to the American way of life. To understand the concept, it is important to know that there is no one structural type, architectural style, or standard size for CIDs. They come in a variety of types and styles, such as single family detached houses, two story town houses, garden style units with shared “party walls”, and apartment-like, multi-storied high rises. Currently in California, there are tens of thousands of CIDs which range in size from a simple two unit development to a large complex having thousands of homes, many commonly owned facilities, and multiple associations under the auspices of one overall master association. However, despite the wide range of differences that may exist among CIDs, all CIDs are similar in that they allow individual owners the use of common property and facilities and provide for a system of self-governance through an association of the homeowners within the CID. The most common type of association of homeowners is the nonprofit mutual benefit corporation. This is a corporation in which the members of the corporation vote for a board of directors which runs the affairs of the corporation. However, some associations, usually the older ones, are unincorporated associations. In many ways, unincorporated associations are treated the same as mutual benefit corporations under California law.
Do you have to join the association?
Yes, membership in the association is automatic. When a person buys a lot, home, townhome, or condominium in a common interest development, he/she automatically becomes a member of the association.
What are Covenants, Conditions and Restrictions (CC&Rs)?
The Declaration of the Covenants, Conditions and Restrictions, or CC&Rs, contains the ground rules for the operation of the association. This governing document identifies the association’s common area and responsibilities, explains the obligations of the association to collect assessments, as well ass the obligation of the owners to pay assessments. It also states that the association may sue owners for violations of the rules or failure to pay assessments and explains what happens if there is any destruction of property in the development as a result of fire or earthquake. Usually, the CC&Rs will also state the duties and obligations of the association to its members, insurance requirements, and architectural control issues.
How are the CC&Rs enforced?
California laws allows that either the association or an owner in a common interest development may sue in court and ask the court to enforce the CC&Rs. The law currently requires that, unless an exception applies, prior to the filing of a lawsuit either the owner or the association must offer to engage in some form of alternative dispute resolution process. You may wish to consult with an attorney who specializes in this type of law if you are faced with or contemplating an enforcement matter.
What is the purpose of the Bylaws?
As stated above, the CC&Rs generally state how an association is to be operated. In almost every instance the association, through its board of directors, has the ultimate responsibility for managing the association. Since the association is usually a corporation, the bylaws establish the rules by which the corporation will be ran. These usually include such aspects as how members vote for the board of directors, the number and term limit of members of board of directors, the duties of the board, the duties of the officers, and other incidental provisions.
Does the Department of Real Estate assist with the enforcement of the Bylaws and CC&Rs?
CIDs are subject to the Davis-Stirling Common Interest Development Act (California Civil Code Sections 1350 et seq.), which is designed to provide homeowners with a system of self-government and dispute resolution. The Department of Real Estate reviews the legal framework of all new CIDs to ensure compliance with the Subdivided Lands Law through the public report application process prior to the homes being offered for sale to the public. Once sales have commenced, the Department’s jurisdiction is limited to the sub divider’s obligations under the public report, which does not include intervention in association disputes. Presently, there is no state or local agency that regulates associations or their members.
Who oversees the association?
The members who own property in the development oversee the association. During the annual meeting of the membership, all members are invited to officially meet and vote for all or part of the board of directors which operates the association. The board of directors’ jobs is to preserve, enhance and protect the value of the development, but it answers to the members. It is not unusual for the board to contact with a professional management company to run the day-to-day affairs of the association.
What is the board of directors and how are its members elected?
The board of directors governs the association. Its members are elected yearly or less frequently. Depending upon the terms mandated in the Bylaws of the association. The Bylaws also determine the number of directors. Directors are elected by the members (owners of property) of the association who vote for vacancies as they occur. (Normally, each lot or unit has on vote no matter how many people own it, with the notable exception that the subdivider may, for a time, have up to three vote for each lot or unit he/she owns).
How can you serve on the association’s board of directors?
There are two ways to become a member of the board of directors. The first is to request that the association place your name on the election ballot so that other members of the association will have an opportunity to vote for you at the next annual meeting. The second way is to request that the board of directors consider appointing you to any interim vacancy on the board.
What are the responsibilities of the board of directors?
The board has the ultimate responsibility for operating the association. That means it makes sure that the association’s money is collected, its bills are paid, the association is operating efficiently, and violations of the rules of the association are addressed. For example, the board is responsible for reviewing the association’s bank statements, preparing a budget, and distributing the budget (or budget summary) to the members prior to the beginning of the association’s fiscal year. The board must also prepare a fiscal year-end financial statement for distribution to the members.
There are numerous other things for which the board is responsible, as set forth in the association’s CC&Rs, Bylaws, the Corporations Code and the Davis-Stirling Common Interest Development Act (California Civil Code Sections 1350 through 1376).
Are there other opportunities to volunteer in the association besides the board of directors?
Usually, an association will have several committees that perform valuable functions. For example, the architectural committee oversees requests for modifications to properties in the development and generally attempts to make sure that modifications and other improvements are consistent with the existing architecture of the development.
There may be other committees to join, depending on the type of development in which you live. An association may have a landscape committee to oversee landscaping. There may be a welcoming committee or an election committee which addresses the election of the board of directors. The specific number and types of committees are usually determined by the associations’ Bylaws, CC&Rs, and/or the board of directors.
How does the association pay its bills?
Each association has a budget that is prepared, based on the common area obligations of the development, and distributed to all of its members. The budget determines how much money the association is going to need to operate for the following year. The association has the right to bill the members for their fair share of the budgeted amount. This billing is known as an assessment, which is to be paid via monthly invoices, coupons supplied by the association, or some alternative method. Ideally, the association collects sufficient money through these assessments and pays the bills for the services and goods contemplated in the budget. If the assessments collected are insufficient to pay the bills, the board of directors can levy what is known as a special assessment. Without member approval, the total of special assessments in any fiscal year cannot exceed 5 percent of the gross budgeted expenses for that year. By paying your fair share of the obligations of the association, through the budget and assessment process, you are paying for the current long-term maintenance obligations of the association. Of course, all the other owners are doing as well.
How is the amount of the monthly assessment determined?
When the budget is prepared, the amounts necessary for the daily operation and long-term reserves for maintenance and replacement are determined based on the level of service for which the association is both required and willing to pay. For example, sometimes there are specific items defined in the CC&Rs that require a certain level of maintenance by the association. Once the annual amount is determined, then it must be collected from the members for the association to operate. Each member’s assessment is usually collected monthly, in 12 equal installments. Some associations collect assessments on a quarterly or annual basis. The CC&Rs will normally indicate the frequency of assessment collections.
Are there different types of assessments or fees?
There are several types of assessments that may apply to your association. The California Civil Code defines assessments as either being regular or special. Regular assessments are needed for the operating (day-to-day) and reserve (long-term maintenance) activities of the association. Special assessment are those levied by the association for major repairs, replacement, or new construction of the common area or for a one-time, unanticipated expense which cannot be covered by the regular assessment (e.g., insurance premiums that unexpectedly “sky rocket”).
Note, a special assessment should not be confused with a monetary penalty levied by the association against an individual owner to reimburse the association for an expense such as damage to the common area, or imposed as a disciplinary measure for a violation of the rules and regulations. Also, some CIDs established user fees or special charges for uncustomary services and activities. Typically, they are imposed on an owner specifically benefiting from the service, such as an owner who wants to use the common area pool, clubhouse, or tennis courts to entertain private guests. The fees are usually on a pay as you go basis and generally cannot become a lien on the owner’s unit or interest. Some associations have other types of assessments designed as well. For example, an association may have a cable television fee which is an assessment. Another association may have what is known as a reimbursement assessment which is actually a special assessment levied against an individual owner charging them for damage to the common area that occurs by virtue of an act by the owner or an owner’s guest. The best place to look for the different types of assessments which may apply to a development is in the CC&Rs of the association.
Who can raise the amount of the assessment?
The board of directors. However, the board must follow certain procedures mandated by California Civil Code Section 1366. Even if the governing documents are more restrictive, the board of directors, may not raise the regular assessment more than 20 percent per year, without the approval of the owners. The board must circulate a budget to the membership no less than 45 days but no more than 60 days prior to the beginning of the fiscal year. If the budget indicates that an assessment increase greater than 20 percent is necessary, majority members of the associations must approve the assessment. There are also provisions for a board to increase an assessment more than 20 percent without member approval in cases of emergency such as an extraordinary expense required by order of a court, or for repairs to the common area.
What happens if you do not pay your assessments?
Usually, the first thing the association will do is send you a reminder letter. The Law is specific in California regarding the due date of assessments and the overall process that an association must follow regarding delinquent assessments. The law states that if an assessment is not paid within 15 days of the due date, a delinquency occurs. At this point, the association can add a charge to your assessment in the form of a late fee in the amount of $10, or ten percent of the monthly assessment amount, whichever is greater, unless the CC&Rs specify a lesser amount. Again, the law covering this area is quite clear and the board must follow these procedures. Once a year, the association will send each owner a cope of the assessment collection policy, which will tell you the amount of the late fee. In addition, if your assessment becomes over 30 days delinquent the association has the right to assess interest up to 12 percent per year on the balance which is owned and unpaid. Furthermore, if you fail to pay your assessments, the matter may be referred to an attorney or foreclosure service. The association has the right to lien your property for the amounts owed as well as other costs such as attorney’s fees. Finally, the association can foreclose and take your property for your failure to pay assessments. Additionally, a personal judgement may be entered against you for failure to pay your assessment. As you can see, it is imperative that all owners pay their assessments in a timely manner. Failure by several owners to pay their assessment obligation could place the association in financial difficulty.
Are there other rules in an association?
An association’s board of director may establish rules and regulations governing issues ranging from where you can park to what can place on a balcony or deck. Associations frequently have guidelines and rules which specify the type of landscaping that may be installed or in some instances, not installed. Rules and regulations can be just as enforceable in an association as the CC&Rs, Bylaws and applicable statutes. The most frequent type of miscommunication between an owner and the association usually arises from an owner being unaware of the rules and regulations when the association attempts to enforce them. You can easily prevent such misunderstandings by making certain you have a current cope of the rules and regulations, which may be obtained from the association’s management company.
Can you make improvements to your home?
The answer is generally yes, depending on the type of home that you have (condominium, townhome, detached, etc.). However, in addition to the conditions in the CC&Rs, most associations have established rules and regulations (also known as architectural guidelines) which must be followed in order to make any alterations or improvements. Generally, associations seek to assist their members who wish to improve their property as long as the improvement is performed in a manner consistent with the CC&Rs and rules and regulations.
Who do you contact if you are having problems with or questions regarding the home interior? The association common area? Neighbors? Paying assessments?
The first place to look for answers to your questions is the CC&Rs. Then you should speak to a board member or, if your association has contracted with a management company, they may provide assistance. Problems with the interior of a home normally are the responsibility of the owner. The association’s common area is managed by the association, so the appropriate contact is either one of the association’s board members or, if applicable, the management company. When there is a dispute between neighbors, sometimes it is best resolved between the owners. Where a dispute involves payment of assessments or an infraction of the association rules or CC&Rs, it would be appropriate to contact the board of directors and/or the management company.
What is a management company and what does it do?
A management company is a separate business enterprise usually hired to act as the agent of the association. As an agent for the association, they take their direction specifically from the association’s board of directors. Typically contractual responsibilities of the managing agent include a variety of services to the association, such as: collecting assessments, paying association’s bills, taking direction from the board of directors for enforcement of rules infractions, and obtaining various vendors to perform services. The managing agent also helps with the budget process and prepares meeting agendas and minutes for the board of directors. Further, the management company provides assistance to all parties in helping solve problems that can occur in CIDs. They advise the board of directors on how to comply with relevant California Civil Code requirements and assist with appropriate and timely compliance. When contracting with a management firm, it is important that the association be willing to pay for the level of services needed.
What happens when you rent your home in a common interest development?
Nothing, as long as your tenant does not create a problem in the development. There is usually no restriction on rentals in a CID. Some CC&Rs require that a rental agreement acknowledge that the tenancy is subject to all of the rules and regulations of the association. Some associations’ rules and regulations also require that you provide the association with a copy of the rental agreement. In most associations, the CC&Rs state that the owner of the property being rented is responsible for the conduct of the tenant. Naturally, it is in the best interest of all parties to prevent problem situations between tenants and owners of other units. If your tenant does damage to the common area or creates a nuisance (e.g., loud music or pet problems), the disturbance could become your problem.
What are your individual responsibilities as an owner living in a CID?
Primarily, pay your assessment on time and abide by the CC&Rs and all other rules and regulations which exist for community harmony.
What are your individual rights as an owner living in a CID?
You have the right to participate in meetings of the board of directors and to be heard. You have the right to enter dialogue with your association board of directors regarding any problem you may perceive in the development. If a dispute arises between you and the association, subject to certain exceptions, you have the rights to go through some form of alternative dispute resolution process before the matter reaches the court system. In some instances, you have the right to also go through such a process about your assessment if the association claims that you owe money which you believe you do not owe.
Who do I contact when I decide to sell my home?
You may wish to contact a real estate professional, the board of directors, the professional management company and/or an escrow company for assistance with the many details. There are a number of documents that an individual owner is legally required to provide to a prospective purchaser of a unit in a CID. You will want to make sure that the buyer is aware of the rules and regulations of the association as well as the assessment obligation so there is not a problem or misunderstanding which could jeopardize the sale of your home.
Conclusion: A successful and viable CID is generally one in which homeowners assume an active role in the association’s function, not only by attending meetings, voting, and paying dues, but also by taking an active role in the actual functioning of the association by running for the elected offices, serving on committees, and generally participating in a group activities. While the framework of the association is the governing documents, it can certainly be said that the “backbone” of the association is the active and involved membership.
What is an Assessment?
Homeowner associations can compel homeowners to pay a share of common expenses, usually per-unit or based on square footage. These expenses generally arise from common property, which varies dramatically depending on the type of association. Some associations are, quite literally, towns, complete with private roads, services, utilities, amenities, community buildings, pools, and even schools. Many condominium associations consider the roofs and exteriors of the structures as the responsibility of the association. Other associations have no common property, but may charge for services or other matters.
Are ‘Dues’ different than ‘Assessments?
A predetermined set of fees usually referred to as ‘Dues’ are collected by HOAs, Community Associations, or divisions of property management for the upkeep of said organizations or neighborhoods in general. These fees are billed at intervals, sometimes by month, quarter, or annually.
What is a Homeowners Association (HOA)?
A Homeowners’ Association (HOA) is a legal entity created by a real estate developer for the purpose of developing, managing, and selling a community of homes. It is given the authority to enforce the covenants, conditions & restrictions (CC&Rs) and to manage the common amenities of the development. It allows a developer to end their responsibility over the community, typically by transferring ownership of the association to the homeowners after selling. Generally accepted as a voluntary association of homeowners gathered to protect their property values and to improve the neighborhood, a large percentage of U.S neighborhoods where free standing homes exist have an HOA. Most homeowners’ associations are nonprofit organizations and are subject to state statutes that govern non-profit corporations and homeowners’ associations.
What is a Community Association?
A community association is a nongovernmental association of participating members of a community, such as a neighborhood, village, condominium, cooperative, or group of homeowners or property owners in a delineated geographic area. Participation may be voluntary, require a specific residency, or require participation in an intentional community. Community associations may serve as social clubs, community promotional groups, service organizations, or quasi-governmental groups.
What is a Neighborhood Association?
A Neighborhood Association (NA) is a group of residents or property owners who advocate for or organize activities within a neighborhood. An association may have elected leaders and voluntary dues. Some neighborhood associations in the United States are incorporated, may be recognized by the Internal Revenue Service as 501(c)(4) nonprofit organization, and may enjoy freedom from taxation from their home state.
What is the difference between a Homeowners Association and a Neighborhood Association?
The term neighborhood association is sometimes incorrectly used instead of homeowner’s association (HOA). Some key differences include: 1. HOA membership is mandatory generally through rules tied to the ownership of property like deed restrictions. Neighborhood association membership is voluntary or informal. 2. HOAs often own and maintain common property, such as recreational facilities, parks, and roads, whereas neighborhood associations are focused on general advocacy and community events. The rules for formation of a neighborhood association in the United States are sometimes regulated at the city or state level. Neighborhood associations are more likely to be formed in older, established neighborhoods, whereas HOAs are generally established at the time a residential neighborhood is built and sold. In some cases, neighborhood associations exist simultaneously with HOAs, and each may not encompass identical boundaries.
What is Association Management?
Association management is a distinct field of management because of the unique environment of associations. Associations are unique in that the ‘owners’ are dues-paying members. Members also govern their association through an elected board or other governing body, along with association committees, commissions, task forces, councils and other units. Typically, the board selects, retains and evaluates a chief executive officer or an executive director who is responsible for the day-to-day management of the association and paid staff. Managers within the association environment are responsible for many of the same tasks that are found in other organizational contexts. These include human resource management, financial management, meeting management, IT management, and project management. Other aspects of management are unique for association managers. These include: membership recruitment and retention; tax-exempt accounting and financial management; development of non-dues revenue and fundraising. Association managers must also be familiar with laws and regulations that pertain only to associations. To attain the knowledge needed to effectively operate in association management, its practitioners may choose to pursue the Certified Association Executive designation.
What is a Proxy?
An individual appointed to act or vote on behalf of another person by representing them at a meeting of the association. The title can also refer to the written piece of paper granting that power.
What is a Quorum?
A Quorum is defined as the minimum number of owners required to hold an official meeting of the association. The number of owners required can vary greatly according to the corresponding association’s governing documents.
What is a Recuse?
the act of initiating a Recuse involves the temporary removal of an association member or board member, or the act of disallowing his or her participation in a particular vote or proceeding.
What is CAI?
Founded in 1973, CAI is Community Associations Institute, a national and chapter-based membership organization dedicated to fostering successful common-interest communities. In addition to state and national legislative advocacy on behalf of associations, CAI provides education, tools, and resources to those who govern and manage association-governed communities. CAI members include association board members and other homeowner volunteer leaders, community managers, association management firms and other professionals who provide products and services to associations, such as attorneys, accountants, and reserve specialists. CAI is committed to being the worldwide center of knowledge and expertise for people seeking excellence in association operations, governance, and management.
Is CAI a national organization or are they local to my area?
CAI is a national organization with almost 60 local and state chapters. CAI members enjoy automatic membership in the chapter of their choice.
What are Governing Documents?
The declaration, bylaws, operating rules, articles of incorporation or any other documents which govern the normal operating procedures of an association.
What is a Lien?
A monetary claim levied against a property for unpaid mortgage, taxes, contractor work, or other charges. A lien is attached to the property, not the owner, but legally must be recorded in the property records of the county of residence. If a Lien is in place, the property owner has very limited ability to do anything involving the property until the Lien is satisfied or removed.
What is the Declaration?
The Declaration is sometimes referred to as the ‘master deed,’ ‘documents,’ or ‘declaration of covenants, conditions, and restrictions’ [CC&Rs]. It describes an owner’s responsibilities to the association which can include payment of dues and assessments as well as the association’s various duties to the owners. It is common viewed as somewhat of a ‘constitution’ of the association. The person or group of persons who either signs the original declaration governing the development and association or acquires the original developer’s rights is referred to as the ‘Declarant.’
What is an Estoppel letter?
An estoppel letter is used in a transfer or conveyance of real property prior to the Closing transaction. The document is sent to a bank (or other lender), to an HOA (or Condo Association), to a city/municipality, or a tenant requesting payoff of a mortgage, assessments or taxes due, or rental amounts due on a lease, to incorporate these amounts into the Settlement Statement for the buyer and seller of the real estate. Assessments and payments due must be incorporated into the amounts due at Closing and paid at the time of the Closing. Some amounts may be pro-rated, but all must be included in the Settlement Statement. The estoppel letter is the document that facilitates this process.
What is an Easement?
An interest or a right in real property which grants the ability to a landowner to use the land of another for a special purpose or endeavor. An association may for example have an easement for slope maintenance or other repair purposes. A public utility may also have an easement for maintenance or repair work to be executed at a future date.
What is a Notice of Noncompliance?
Similar in essence to a lien, the Notice of Noncompliance is a document sometimes authorized under the CC&Rs and may be recorded in the county property records. It’s essential purpose is to notify prospective buyers that the property is in violation of the documents.
What is a Common Area?
Any area of improved real property intended for shared use by the members of an association.
What are Ordinances?
An Ordinance is an individual or set of laws adopted by local government at the county and city level.
Where do I send my payments?
If members are current, they can go online and make a payment on weldonbrown.com (be aware there is a processing fee).
Members can also bring a physical check to our office. Our address is 5029 La Mart Drive, Riverside CA 92507. Please place the check in our drop box located at the front of the building (left of front door).
Members can also mail in a physical check to our P.O. Box.
C/O Weldon Brown Co. PO Box 513049, Los Angeles, CA. 90051-1049
*Please make sure the property address and association name is on the check*