We have previously discussed some of the more common, and (arguably) well-known terms associated with the HOA and the language that goes with it, but there are other, less-known terms that are integral to understanding the ins and outs of living within a planned community.
When members of the community serve on the board for the HOA, they take on what is known as fiduciary responsibility. This term refers to the obligation of the board to make decisions, in regards to the neighborhood, that best benefits those who live there. This means that those who are acting on the board, when making important decisions, must weigh the wants, needs and desires of the larger community ahead of their own interests. And while it is not always the case, often with homeowners associations, this idea refers to the financial decisions that must be made in order to keep the community running at its best. In order to better understand fiduciary responsibility as it pertains to the HOA, let's look at a specific example. Let’s say that your community is in need of a company to landscape and maintain public spaces. Before a company can be hired, throughout research must be done, multiple bids must be sought out, costs must be assessed, and it must be clear that in choosing a particular company, no board member has any personal gain. In the end, the company that is selected must be the one that is of the most benefit to the community.
Here is a sweet word to pull out in your next game of scrabble (17 points, minimum). Quorum refers to the minimum number of homeowners needed in attendance at a community meeting in order for the decisions made there to be legally binding. This idea dates way back to a political publication titled, Robert’s Rules of Order, which was first published in 1876 with the intent of establishing fair and equitable rules for non-legislative organizations. The specific number of individuals needed to meet this standard (often written as a certain percentage of homeowners) vary from community to community, and should be addressed in the governing documents. In many situations, more than 50% of homeowners within a given community are needed to meet quorum. Quorum is considered necessary to protect the best interest of the neighborhood because it ensures that major decisions made in regards to the community are supported by the majority of those who reside there. This creates a safeguard, keeping a disproportionately powerful minority from driving the decisions of the neighborhood.
Now, here is a term that we hope none of our readers become too familiar with. The simple definition of lien, according to the Oxford Dictionary, is “a right to keep possession of property belonging to another person until a debt owed by that person is discharged.” When you purchase a home within a planned community, you agree to pay a certain amount of money (dues) every so often (usually monthly or quarterly), in order to help with the upkeep of the neighborhood, as well as gain access to any amenities that your community may boast. However, if you make the ill-advised decision to neglect these payments, you may find yourself in a most unenviable position. When dues go unpaid, the association can choose to take a homeowner to court in order to collect delinquent payments or fees. Depending on the state you live in, as well as what is outlined in your governing documents, the HOA may not even need to present their case in court in order to place a lien on your property (a good reason to do a bit of research). In the most extreme cases, the HOA can choose to foreclose on your home and sell it to recoup their owed money. A simple translation - you lose your home.