Association or Community Manager
Board of Director Duties and Responsibilities
Perspectives of board, homeowner and manager
Board of Director Perspective
Basic Condominium/Townhome Legal Documents
State Enabling Statute-permits the creation of condominium/townhome form of ownership and prescribes the basis of determining ownership interest, rights and obligations of the owners, duties and powers of the association, and the process of dissolution of the condominium
Subdivision of Condomimium/Townhome Plat-describes the location and nature of the common elements and the units
Condominium Declaration or Master Deed-defines the units, common and limited common elements, and is the collection of covenants imposed on the property to provide for: the basis for allocation of percentage ownership interest; the obligation of each owner to share in funding the cost of association operations; the power, authority, and responsibility of the association in its operations and in making and enforcing rules
Individual Unit Deeds-comprises the individual unit deed
Articles of Incorporation-creates the association as a corporation under state corporate statute and defines its membership and sets forth the process for creating the board of directors, voting procedures, etc.
Bylaws-implements, in specific detail, the provisions of the Declaration and the Articles of Incorporation regarding the association operations, including delineation of the meeting process, election procedures, powers and duties, board meetings, committees, insurance requirements, rule-making and enforcement process
Rules and Regulations-sets forth the operational powers or provisions and the use restrictions adopted by the association
Cash Method of Accounting-income and expenses are only recorded when cash changes hands. Financial reports only reflect cash transactions. This is a relatively simple system for simple situations. Because all obligations are not recorded until cash changes hands, this method does not provide an accurate portrayal of the financial condition of the association at any given time. Generally Accepted Accounting Principles (G.A.A.P.) requires associations to use the Accrual Method of Accounting.
Accrual Method of Accounting-keeps track of all financial activities, including revenue as it is earned (as opposed to when it is received) and expenses as the obligation is incurred (as opposed to when it is paid). This makes possible a more accurate determination of the financial condition of the association at any point in time. Also, this is a better method for multi-year tracking of capital reserves credits and deficiencies. The primary disadvantage is the greater complexity and technical knowledge that is needed to maintain the records, understand the reports, etc.
Capital Reserves-the Board has the obligation to repair and replace major capital facilities, buildings, and equipment of the association. The ideal method of providing for these future expenses is the establishment of a capital reserves system and budget to assure that such funds are available when needed. With knowledge that the future holds predictable major expenditures for repair and replacement of facilities and equipment, the association could begin the gradual accumulation of funds through a reserve account to meet all or a portion of that expense when it comes due.