Glossary of Terms

DISCLAIMER:  This glossary is provided to give the layman the general idea of what is meant by the various terms.  The definitions are not intended to be legally significant, comprehensive or exhaustive.  Actual legal definitions may differ from state to state.


Agent refers to someone authorized by another (principal) to act for or in place of the principal; one entrusted with another’s business.

Alternative Dispute Resolution
Any form of dispute resolution other than by formal court proceedings; and can include mediation, arbitration, etc., as opposed to litigation.

A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use.  Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.

A form used to apply for a sale or rental for a prospective owner or tenant.  The association may also have applications for use of clubhouse and other facilities.

Appurtenant means belonging to, or connected with, the use of something. 

Arbitration is an informal trial proceeding used to settle disputes rather than pursuing formal court proceedings.  A decision by an arbitrator can be either binding (final decision) or non-binding (parties may ignore decision).

Areas of Responsibility
A document that outlines and defines the maintenance and/or insurance obligations of the association and its board of directors.

Articles of Incorporation
Documentation filed with a Secretary of State’s office which establishes general information about a corporation and its purpose.

Assessment is the fee or dues payable by members of an association. Assessments are determined annually in advance by the board of directors as part of the budgeting process.  Assessments may take the form of a regular (annual) or special assessment (for a special project or purpose).

Association means a non-profit corporation or unincorporated association created for the purpose of managing a common interest development.

One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.

The highest level of review of an association’s financial books and records.  An audit generally involves a complete reconciliation of all vouchers, charges, and expenditures.  An annual audit is normally required by the association’s declaration.


Balance Sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date.

A piece of paper on which an association member registers his or her vote on a decision voted upon by the association at a called meeting.

A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.

A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.

An improvement that increases property value as distinguished from repairs or replacements that simply maintain value.

Board Meeting
Board Meeting includes any congregation of a majority of the board members at the same time and place to hear, discuss or deliberate upon any item of business scheduled to be heard by the board, except those matters that may be discussed in executive session.

Board of Directors
Board of Directors is the governing body of a corporation such as an association. The board is elected by the members of the association who elect the officers. The directors and officers have a duty to comply with the governing documents of the association and all applicable laws.

The financial plan for an association which estimates income and expenses for a specific time period.

Building Code
Local regulations that control design, construction, and materials used in construction.  Building codes are based on safety and health standards.

Formal rules and regulations adopted by an association which govern its activities and actions of the board of directors. The bylaws address such things as elections of both directors and officers, the holding of meetings, rights to notice and the powers of directors and officers.


Capital Expenditure
The cost of an improvement made to extend the useful life of a property or to add to its value.

Capital Improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

Covenants, Conditions and Restrictions are the association’s governing documents; also referred to as the declaration, rules, regulations, or master deed.  The CC&Rs are filed in the real property records of the county in which the association is located.  (See Declaration.)

Certificate of Deposit
A document written by a bank or other financial institution that is evidence of a deposit, with the issuer’s promise to return the deposit plus earnings at a specified interest rate within a specified time period.

Certificate of Title
A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner.

The efforts used to bring a delinquent assessment current and to file the necessary notices to proceed with foreclosure when necessary.

Common Area(s)
The improved real property shared by the members of an association.  The common areas typically include, but are not limited to, landscaped areas, driveways, clubhouse, hallways, pools and elevators.

Common Area Assessments
Levies against individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowners’ association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project.

Community Association
A property owners’ association requiring mandatory membership bound by governing documents which require individual owners to pay assessments for the maintenance and administration of the common areas.

Community Enhancement Fund
The Community Enhancement Fund is a special operating account created to support quality of life programs in a community association; such as, unique projects that are consistent with the spirit and focus of an association.

Condominium consists of an undivided interest in real property, which is the common area, coupled with a separate interest in space called a unit, the boundaries of which are described in the condominium documents.

A conversion condominium is one in which the building or buildings originally existed with units that were rented (for instance, an apartment).  Essentially, the apartments are “converted” into condominiums by filing a declaration of condominium, conditions and restrictions, and selling units. 

Cooperative (Co-op)
A development in which a corporation holds title to all improved real property and the corporation’s shareholders receive a right of exclusive occupancy in a portion of that real property.


Declarant (Developer)
The person or group who either signs the original declaration governing the development and association or acquires the original developer’s (declarant’s) rights.

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 including payment of dues and assessments as well as the association’s duties to the owners.  It is essentially the constitution of the association.

Deed-in-Lieu of Foreclosure
A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure; also called a “voluntary conveyance”.

Failure to make assessment when mortgage payments are due.

Directors & Officers Liability Coverage
Insurance coverage that protects the association’s volunteer board members in lawsuits brought due to their actions taken on behalf of the association.  Board members are not protected from actions proven to be criminal or negligent.  It also covers errors and omissions by board members.


An interest or right in real property which grants a right to a landowner to use the land of another for a special purpose.  An association may often have an easement for slope maintenance or other repair purposes, or a public utility may have an easement for use of maintenance or repairs.

Employee is a worker that performs services subject to the will and control of the employer, both as to what will be done and how it will be done.  The employer establishes hours of work, may provide training, and the worker may not assign anyone to do the required work.

Anything belonging to one landowner that extends onto an adjacent landowner’s property such as a fence, landscaping, etc.

Executive Session
Executive Session refers to a confidential portion of a board meeting, where the membership is excluded from attending or participating.


Fee Simple
Absolute title to land, free of any other claims against the title, which one can sell or pass to another by will or inheritance.  This is a redundant form of “fee,” but is used to show the fee (absolute title) is not a “conditional fee,” or “determinable fee,” or “fee tail.” Like “fee” it is often used in deeds transferring title as in “Harry Hadit grants to Robert Gotit title in fee simple…” or similar words.

The highest ethical and moral obligations and duty of good faith a person is charged with for fulfilling their responsibilities.  The board of directors of a community association has a fiduciary responsibility to act in the best interests of the association.

Flood Insurance
Insurance that compensates for physical property damage resulting from flooding.  It is required for properties located in federally designated flood areas.


Governing Documents
The declaration, bylaws, operating rules, articles of incorporation, CC&R’s or other documents which govern the operation of the association.

The person to whom an interest in real property is conveyed.

The person conveying an interest in real property.


Hazard Insurance
Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards.

Homeowner’s Insurance
An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents; usually called an HO6 policy for condominium and townhomes.


Implied Warranties
The term “implied warranties” is often used synonymously with statutory warranties, though there are other warranties that can be implied by contract.

A contract or agreement whereby one person agrees to protect and defend another against loss or damage.

Independent Contractor
An independent contractor is a worker hired to do a specific job over which the employer has no right to control the manner in which the work is done.  The worker is generally licensed and offers services to the public.  Independent contractors establish their own hours and receive no training.  Independent contractors are free to assign work to others, if they determine to do so.

A request for the court to require a party to stop doing something (or in some cases to do something) until the situation can be resolved legally.

Insurance Binder
A document that states that insurance is temporarily in effect.  Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.


Permission granted by an owner to another for the execution of work on the owner’s land.

A monetary claim made against a property for unpaid mortgage, taxes, contractor work, or other charges.  A lien attaches to the property, not the owner, but must be recorded in the property records of the resident county.


Managing Agent
A person or entity hired to assist the board of directors in enforcing the documents and managing the assets, including funds, of the association.

Management Agreement
Management Agreement is the contract between an association and management company setting forth the rights and obligations of the parties. These agreements may be “full service” or “financial service” contracts.  Some management companies provide more services than others.

Master Association
Sometimes condominiums are created using master and sub associations.  For example, there may be both a residential condominium and a commercial condominium created by the same declarant and on one site.  In that case, there may be a master condominium that includes them both, the declaration for which would govern them both.

Mechanics’ Lien
Mechanics’ Lien is a right provided by law to individuals and businesses that make improvements to real property and who are not paid.  Mechanics include any worker or business that supplies building materials or labor for the construction or improvement of real property.

An informal proceeding during which a neutral third person works with both parties in a legal dispute trying to reach a resolution.

An attempt to alleviate trouble or cause damage to be less severe.

Money Market Account
A savings account that provides bank depositors with many of the advantages of a money market fund.  Certain regulatory restrictions apply to the withdrawal of funds from a money market account.

A formal request, usually in writing, for a hearing and decision on a specific issue.


Net Income
The amount of money remaining after deducting total expenses and expenditures from total income.

Net Loss
This occurs when expenses are more than income.

Notice of Noncompliance
Similar to a lien, this notice is sometimes authorized under the CC&Rs and may be recorded in the county property records to notify prospective buyers that the property is in violation of the documents.

Arises from a person’s use of their property in violation of rules, laws, or standards which obstructs or injures the rights of another and creates annoyance, an inconvenience, or discomfort.  Examples of nuisance can be loud noises, odors, or vehicles in disrepair on a property.


Laws adopted by local government at the county and city level.


Planned Unit Development (PUD)
Planned Unit Development means a common interest development other than a condominium, or stock cooperative.  The common area is often owned by the association, however, it may also be owned in common by the owners of the separate interests.  The separate interest is a lot, parcel, area or space, not a unit.

Power of Attorney
A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

Priority of Liens
Liens are usually ranked in the order in which they are “perfected” or recorded. As a result, “first in time, first in line” is how liens are normally prioritized.

A person appointed to act or vote on behalf of another person by representing them at a meeting of the association.  This also refers to the written piece of paper granting that power.  Proxies may be limited or general.


Quitclaim Deed
A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

The minimum number of owners required to hold a meeting of the association. The number of owners required varies according to the governing documents.


To temporarily remove an association member or board member or disallow his or her participation in a particular vote or proceeding.

Remedy / Relief
Compensation sought by a plaintiff which can include money damages, injunctions, etc.

Funds set aside by a community association for the future repair of, replacement of, or additions to major components the association is obligated to maintain.

Reserve Study
A study of the association’s reserve account requirements which identifies the major components for which the association has maintenance responsibility and their probable remaining useful life.  It estimates the cost for the components and the total contribution necessary to finance those costs.

An analysis of an association’s books and financial records that is less stringent than an audit.

Right of First Refusal
A provision in a Declaration requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

Rules & Regulations
Rules the association’s board is authorized to adopt to implement and interpret the CC&Rs.


Special Assessment
Special Assessment is an assessment made usually for a special project or in response to a large unbudgeted expense.

Special Meeting
Any meeting of the association (unit owners) or board that is not a regularly scheduled meeting is a special meeting.  Generally, the only regular meeting for unit owners is the annual meeting, so all other meetings are special meetings.  Special meetings often have special notice requirements.

Statute of Limitations
A time period during which a complaint must be filed or it is not recognized.

In a condominium, there may be a master association and one or more sub-associations. Sub-associations are subject to the terms of both the master association declaration and sub-association declarations.


Title Insurance
Insurance provided by a title insurance company that reviews all recorded documents that impact the title of a particular piece of real estate. This title “search” discloses mortgages, liens, or other encumbrances on the property that would negatively impact the purchaser’s ownership rights.

Title to Real Estate
Ownership of land and the right to use it.

A term used to describe an attached residential dwelling.  A townhome can be a planned development on a lot or a condominium.


The voluntary relinquishment of a right, claim, or privilege.


A comprehensive system of land use controls normally reserved for city or county governments.

DISCLAIMER:  This glossary is provided to give the layman the general idea of what is meant by the various terms.  The definitions are not intended to be legally significant, comprehensive or exhaustive.  Actual legal definitions may differ from state to state.
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