Some of the questions most frequently asked by owners of units in community associations:
Q: 'What are the governing documents? (commonly referred to as the 'By-laws' or 'DOCS')
A: The governing documents give the Executive Board authority and direction to govern the association. They consist of:
Articles of Incorporation
- provide the legal basis for operating within Pennsylvania Corporation Codes, bring the corporation into existence, defines the corporation's basic purpose and powers, establishes the executive board.
Declaration of Condominium/Declaration of Covenants, Conditions, and Restrictions
- deals with the physical entities that comprise the association, establishes the association as a legal entity, provides annexation and Declarant rights, describes association rights & responsibilities, etc.
By-Laws/Code of Regulations
- regulations for the administration and management of the association, outlines how the association shall be governed and deals with the association as a corporation, i.e., elections, assessment collections, terms of office, duties of officers, meetings and quorum requirements, etc.
Rules and Regulations/Resolutions
-adopted by the Executive Board within the guidelines of the Declaration.
State Statutes
- PA UNIFORM CONDOMINIUM ACT
- PA UNIFORM PLANNED COMMUNITY ACT
- establishes the framework for operation of all community associations in the state.
Q: 'What is the association responsible for (or 'What do my dues cover')?'
A: It depends on the association's governing documents! The declaration provides detail on what are common elements and limited common elements vs. what consists of a unit in a condominium. Generally, the maintenance, upkeep, and replacement of the common elements is the responsibility of the association. And certain responsibilities are sometimes borne by the association with respect to limited common elements also.
In a homeowners association, the Declaration of Covenants, Conditions, and Restrictions generally specifies which exterior building and grounds components are maintained by the association.
It is important that unit owners become familiar with these documents in order to fully understand and recognize their responsibilities as well as those of the association. The budget may also be consulted to aid in determining how the association spends money.
Q: 'What types of insurance do I need as a unit owner, and what is covered under the association's master insurance policy?'
A: Of course, each association's master policy is different; but most master policies purchased by community associations cover protection for property damage to the common elements/common area, general liability, directors & officers (D&O) liability, which protects the Executive Board in business judgement rulings, fidelity and employee dishonesty bonding, worker's compensation (if applicable), and various other types of insurance.
For owners of a unit in a condominium, an HO6 policy is required, which provides coverage for contents, components of the unit (as defined in the Declaration), and various liability coverages.
For owners of a unit in a homeowners association, an HO3 policy is required. This type of policy is very similar to the type of policy purchased by owners of single family detached houses, as the owner owns a lot and its improvements (the physical structure), whereas a condominium unit owner is insuring a confined space (defined as a unit), with no external physical structure or lot.
Consult with your insurance agent, or the association's agent, who is the most knowledgeable as to exactly what is covered by the association's master policy.
Q: 'What are the qualifications to become a board member?'
A: Basically, there are only two qualifications - having an interest in your community association, and the ability and desire to be active on the board by attending meetings and taking an active part in the decision-making process of operating the association.
Yes, some association's governing documents stipulate that board members must be unit owners, or must be a certain age and/or a resident of the state in which the association exists, or other similar types of stipulations. But being a good board member requires the candidate to put their own personal interests aside in favor of the interests and good of the community as a whole. Board members share with each other certain fiduciary responsibilities towards the association and its membership. There is no room for individual and/or hidden agendas when governing a community association.
Q: 'What is a Resale Certificate and why is it required?'
A: A Resale Certificate is a type of owner disclosure statement which is submitted by a seller to a buyer in a condominium or homeowners association. The document is required by Pennsylvania state statute to be delivered to a prospective condo/HOA buyer after a sales agreement is executed.
The certificate discloses information not only about the seller's financial relationship with the association, but also about the association itself. Data such as reserves on hand, insurance coverage, architectural violations, voting procedures, and other relevant information is prepared, usually by the association's managing agent, and delivered to a buyer, who is required to acknowledge receipt by signing the document. There is usually a fee charged to the seller for preparation of a Resale Certificate/packet. The buyer also acknowledges receipt of other important association documents such as the governing documents, latest financial statement, and most recent budget.
The Resale Certificate/packet provides a potential buyer of a unit in a condo/homeowners association, among other things, a snapshot of the association's financial shape, which may be a factor in their decision to ultimately purchase the unit.
