Assessments

Every member of an association is obligated to pay a share of common expenses through payment of assessments. As an association is funded and operates using assessment income, collection of assessments is one of the most important functions a board can undertake. When assessments go unpaid, associations can suffer from deferred maintenance and other problems that can ultimately affect the value of property in the community.

Abstain

Board members should generally not abstain except where they have a conflict of interest. Corporations Code section 7231 calls for directors “to act in the best interest of the corporation…,” not to abstain because they don’t know what to do or to avoid offending one side or another. The Robert’s Rules admonition to abstain except to make or break a tie applies to larger assemblies in which the president’s vote may influence the assembly’s votes, not to a small board or committee. See Robert’s Rules, Newly Revised, 11th Edition, §4, p. 50, Lines 18-23. Typically, presidents and other officers (secretaries, treasurers, etc.) don’t have a vote; board members do, and board members are supposed to act.

Age Restrictions

The generic term for restrictions based on age which are part of several recognized types of senior housing/housing for older persons (e.g., “55+” or “all-62” housing), as defined in state and federal law. To impose restrictions or rules based on age in communities not otherwise qualified as senior housing may result in a violation of various fair housing laws.

Assignment of Rent

CC&Rs may provide that if a member becomes delinquent in assessments, that member is deemed to have assigned rental income from their association property to the association. (Civ. Code §2938) In the absence of such a provision, if the association has a judgment against a member, it may seek a court order for an assignment of rents to be paid toward satisfaction of that judgment. (Code Civ. Proc. §708.510 et seq.)

Accounting

Common interest developments in California are, at their roots, nonprofit corporations. Many associations may have revenue in the hundreds of thousands and assets in the millions. In order to ensure owners are protected, associations must provide thorough, transparent accounting reports utilizing the accrual method of accounting.

Amendment

The act of altering a governing document. With some exceptions, the amendment of CC&Rs and bylaws requires a member vote, while the board has the authority to amend rules. The percentages of member consent required for amendment are normally set forth in the governing documents themselves. Occasionally the consent of persons or entities other than the members (e.g., lenders) is required as well. The Davis-Stirling Act also contains a procedure for application to the Superior Court for approval of a proposed CC&R amendment when sufficient owner consents cannot be obtained. (Civ. Code §4275)

Association

This is the entity charged with the management and operation of a common interest development. (Civ. Code §4080) Associations are representative governments in which members typically have the right only to elect the board and make major decisions such as document amendments, imposing assessments that exceed statutory limits on the board’s power, etc. Otherwise, association boards typically have the right to make most day-to-day decisions. Also see Homeowners Association.

Accrual Accounting

This method of accounting recognizes economic transactions when they occur, regardless of when cash actually changes hands. The goal of this system is the matching principle, wherein revenues are matched to expenses at the time the transaction occurs, as opposed to when the cash receipt or disbursement actually occurs. While slightly more complicated than cash accounting, this method gives a more accurate picture of an association’s fiscal status.

American Flag

The governing documents may not limit or prohibit the display of the United States flag on or in the owner’s separate interest or exclusive use common area, except as needed to protect public health or safety. (Civ. Code §4705; Govt. Code §434.5; 4 U.S.C. § 5) Certain noncommercial signs and flags are also permissible in common interest developments. (Civ. Code §4710) See each statute for specific requirements and limitations.

Attorney-Client Privilege

The attorney-client privilege is perhaps one of the most valuable tools to a board. This privilege protects communications between the association’s attorney and the board of directors. This ensures the board can be candid and forthright in their discussions with their attorney. It is important to keep in mind that this privilege only exists so long as the communication itself, the contents of the communication or the content of the communication are not divulged to non-board members.