Your Questions Answered
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 propertyof 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.
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.