Goverining Flashcards
Rule (Sanction)
Specific statement of required behaviors whose violation carries a penalty .
Articles of incorporation
Bring the corporation into existence, define its basic purposes and powers, indicate whether stock will be issued, and indicate whether there will be a board of directors.
Bylaws
Formally adopted governing regulations for the administration and management of a community association.
CC & Rs (Covenants, Conditions & Restrictions):
The governing documents that dictate how the homeowners association operates and what rules the owners—and their tenants and guests —must obey. These legal documents might also be called the bylaws, the master deed, the houses rules or another name. These documents and rules are legally enforceable by the homeowners association, unless a specific provision conflicts with federal, state or local laws.
Community association:
A group of owners who wish to provide a communal basis for preserving, maintaining, and enhancing their homes and property.
Condominium
A living unit fully owned by an individual with an undivided interest in the common elements of the community. The community association itself owns no real estate as an association.
Cooperative
Wherein an individual owns stock or membership in the cooperative, and holds a proprietary lease or occupancy agreement for his or her living unit.
Declaration:
Declaration is used interchangeably with CC & Rs.
Governing documents:
Documents which provide for the legal structure and operation of the community.
Indemnification:
To indemnify and hold harmless means to exempt an individual or entity from responsibility for claims made against the organization and to reimburse the individual or entity for damages or expenses incurred as a result of such claims.
Business judgment rule:
rule: It a board has exercised reasonable business judgment in making a decision, the court will generally not consider the board negligent in its fiduciary duty, nor will the court substitute its judgment for that of the board. However, the board must demonstrate how it has taken care in reaching a decision. It is up to the court to decide if the board has exercised reasonable business judgment.
Fiduciary duty
Requires directors to act in the best interests and for the benefit of the corporation, thus the community as a whole. This fiduciary duty has two components: one, the members are required to avoid conflicts of interest and acting out of self-interest; and two the members are also required to act as reasonable people in managing the association’s affairs.
Management ethics:
The term “ethics” refers to the specific choices to be made by an individual in his or her relationships with others. Professional ethics are the rules or standards that govern the conduct of members of a profession. The assumption is that the special expertise held by members of the profession holds them to a high standard of trust by others.
Management audit:
A management audit consists of a review of governing documents and existing policies and procedures, current condition of the property, owner/resident satisfaction, and fiscal operations. This review can be done by the board and manager together, or a third-party management consultant can be hired.
Management plan:
A management plan is a statement of goals and objectives approved by the board. It includes the yearly cycle of tasks that management should perform on the community association’s behalf.
