LATEST UPDATES ON LEGAL & LEGISLATIVE ISSUES FOR NEVADA COMMON INTEREST COMMUNITIES & PROFESSIONALS ...
A Community Association Solutions (CASolutions) Website
For Those Involved in the Management and Support of Common Interest Communities
CIC INDUSTRY DEFINITIONS
AACM: Arizona Association (of) Community Managers - The state trade group for managers in the community association management business. - www.aacmonline.org
AICPA: American Institute of Certified Public Accountants. www.aicpa.org/
AMS: Association Management Specialist. A CAI designation awarded to members who have met specific criteria of experience and education in community association management. Less difficult to obtain than the PCAM designation defined below.
ACC: Architectural Control Committee. A committee (usually a standing committee required by the association documents) appointed by the Board of Directors that reviews and approves plans for exterior alterations.
ACTION IN LIEU OF A MEETING: .(Added November 2010) This is an action that can be legally taken by a board, outside of a board meeting. This procedure should only be used in an emergency as it is frowned upon by the Nevada Real Estate Division. To be properly carried out, 100% of the board members should sign a resolution. This 100% is recommended as on or two directors could challenge the decision and change the outcome.
ARC: Architectural Review Committee. A committee (usually a standing committee required by the association documents) appointed by the Board of Directors that reviews and approves plans for exterior alterations.
ASSESSMENTS: (Added November 2010) Many individuals in a CIC refer to the fees paid by an owner as DUES. These fees are not dues, but ASSESSMENTS. Owners pay assessments to any state agency on their property and realize that if they do not pay these assessments their home can be taken away. This is no different from associations. Community Managers and members of the board do their owners a disservice when they refer to Assessments as Dues. Terminology is important in any industry and proper use of the term "Assessment" is critical in the CIC industry.
AUTHORIZE: To empower; to give a right or authority to act. To endow with authority or effective legal power, warrant, or right. To permit a thing to be done in the future. It has a mandatory effect or meaning, implying a direction to act.
AUTHORITY: Permission. Right to exercise powers; to implement and enforce laws; to exact obedience; to command; to judge. Control over; jurisdiction. Often synonymous with power. The power delegated by a principal to his agent. The lawful delegation of power by one person to another
BUSINESS JUDGMENT RULE: Such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances.
CA: Community Association. Refers to all types of associations; preferred definition by CAI.
CACM: California Association of Community Managers. The state trade group for managers in the community association management business. www.cacm.org
CAI: Community Associations Institute. The national trade/professional membership organization for the community association industry. www.caionline.org
CAPITAL IMPROVEMENT ... Definition(s):
1) A capital improvement is any (i) substantial discretionary addition to the common areas, (ii) voluntary significant upgrade to common area materials, or (iii) discretionary material alterations to the appearance of the development.
2) According to the PPC Guide (Section 307 – Capital Improvement Funds), Capital improvement funds are funds designated for the acquisition or construction of new common area components. Examples are the construction of a new clubhouse or the purchase of an adjacent lot for a park. After the new components are acquired, they may need to be included in the reserve study for the future repair or replacement.
Difference from what is called a Capital Expenditure (Totally different concept from a Capital Improvement):
Capital expenditures - Per the PPC Guide (Section 304.18 – Capitalizing Personal Property), FASB ASC 972-360-25-5 (formerly the AICPA guide, Paragraph 2.11) requires CIRAs to capitalize common personal property, such as furnishings, recreational maintenance equipment, and work vehicles. CIRAs generally hold title to personal property and the CIRA’s board of directors usually is able to sell personal property at its discretion and retain the proceeds. Thus, the property qualifies for asset recognition under the criteria in paragraph 304.5.
CCAM: Certified Community Association Manager. A manager designation awarded by the California Association of Community Managers after meeting specific requirements.
CC&R’s Covenants, Conditions and Restrictions: (Black’s Law Dictionary does not have a definition for this term) This document is the document that is recorded against each property as they are annexed into a community. It normally has the lender provisions because the lenders want certain protections before they agree to extend money for a home. It normally has the use restrictions and maintenance provisions, which detail who will do what whether the Association or each individual owner.
CIC: Common Interest Community. Refers to three specific types of associations and used by the National Conference of Commissioners on Uniform State Laws (NCCUSL).
CID: Common Interest Development. Refers to all types of associations; used by the California Department of Real Estate (DRE).
CIRA: Common Interest Realty Association. Refers to all types of associations; preferred by the American Institute of Certified Public Accountants (AICPA)
CLAC: California Legislative Action Coalition. Legal advocacy arm of CAI.
CMCA: Certified Manager of Community Associations. A manager certification available through CAI for meeting certain minimum requirements for managing community associations.
CONDOMINIUM: A community association where members usually own just the air-space of the unit (defined further in the Documents). The association is generally responsible for all maintenance except the interior of the unit.
CONFLICT OF INTEREST: Term used in connection with public officials and fiduciaries and their relationship to matters of private interest or gain to them.. Ethical problems connected therewith are covered by statutes in most jurisdictions and by federal statutes on the federal level. The code of Professional Responsibility and Model Rules of Professional Conduct set forth standards for actual or potential conflicts of interest between attorney and client. Generally when used to suggest disqualification of a public official from performing his sworn duty, term “Conflict of Interest” refers to a clash between public interest and the private pecuniary interest of the individual concerned. A situation in which regard for one duty tends to lead to disregard of another. A conflict of interest arises when an individual's personal or financial interest conflicts or appears to conflict with his official responsibility.
COOPERATIVE: A community association where members own stock in a corporation, The corporation owns the building. The association is generally responsible for all maintenance except the interior of the unit. Not a very common form of Common Interest Ownership in the Western US.
DRC: Design Review Committee A committee (usually a standing committee required by the association documents) appointed by the Board of Directors that reviews and approves plans for exterior alterations. More commonly called the Architectural Review Committee (ARC). Care needs to be taken as the documents may give this committee considerable independence from the board.
DRE: Department of Real Estate (California).
ECHO: Executive Council of Homeowners. A Northern California industry organization created and run for and by homeowners.
ETHICS: Of or relating to moral action, conduct, motive or character; as, ethical emotion; also, treating of moral feelings, duties or conduct; containing precepts of morality; moral. Professionally right or befitting; conforming to professional standards of conduct.
FIDUCIARY DUTY: A duty to act for someone else’s benefit, while subordinating one’s personal interests to that of the other person. It is the highest standard of duty implied by law.
FINANCIAL MANAGEMENT: A term used to describe a management relationship when the management company is responsible only for the financial operations of an association.
FULL SERVICE MANAGEMENT: A relationship when the management company is responsible for all aspects of managing an association.
GAP REPORT: Guide for Association Practitioner Report. Publication of CAI. Each report focuses on one topic of interest in community association operation. I.E. "Transition from Developer Control", etc.
GOOD FAITH: Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage, and an individual’s personal good faith is concept of his own mind and inner spirit and, therefore, may not conclusively be determined by his protestations alone. Honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. An honest intention to abstain from taking any un-conscientious advantage of another, even through technicalities of law, together with absence of all information, notice, or benefit or belief of facts which render transaction un-conscientious. In common usage this term is ordinarily used to describe that state of mind denoting honesty of purpose, freedom from intention to defraud, and generally speaking, means being faithful to one’s duty or obligation.
HOA: Homeowners Association. This term is usually used to describe a single family home complex although it may also be used with townhouse complexes.
LAC = Nevada’s Legislative advocacy arm of CAI.
LID = Local Improvement District, which is for a local city entity and includes streets, landscaping and any other infrastructure that the builder had to build to develop a property.
MASTER PLANNED COMMUNITY: A development usually consisting of several separate community associations. There is usually a special association that oversees some common areas and may have architectural review responsibilities. This type of community is also referred to as a Master Association or Umbrella Association.
MAY - Black’s Law Dictionary 6th Addition defines may as the following: “…. Word “may” usually is employed to imply permissive, optional or discretional, and not mandatory action or conduct. As a general rule, the word “may” will not be treated as a word of command unless there is something in context or subject matter of act to indicate that it was used in such sense. ……. In construction of statutes and presumably also in construction of federal rules word “may” as opposed to “shall” is indicative of discretion or choice between two or more alternatives, by context in which word appears must be controlling factor.”
MIXED-USE: A community association where there is a combination of commercial and any type of residential properties.
NRED – Nevada Real Estate Division In control of the real estate, appraisers, community managers, reserve study specialists and inspectors of structures.
NOT WITH STANDING: Regardless (Or think “I don’t care what it says. This takes precedence”)
ON-SITE MANAGER: A manager who works for only one property and has his or her offices located on the property. Can be an employee of the association or of an outside management company.
PCAM: Professional Community Association Manager. A designation awarded by CAI to members who meet specific criteria of experience and education in community association management. More difficult to obtain than the AMS designation defined above.
PMDP: Professional Management Development Program. A series of courses offered by CAI that must be taken as part of the PCAM designation and continuing education process.
PORTFOLIO MANAGER: A manager who manages several properties. He or she usually has an office separate from the properties managed.
PROVISIONAL COMMUNITY MANAGER: A Manager who has completed the 60 hours of classes, passed the class tests, passed the State of Nevada test, passed a background check and has received their license to complete the final 2 year AND 1,320 hours of specific things working under a Supervisory Community Manger to do specific things as detailed in NRS 116.
PRUDENT MAN RULE: An investment standard. In some states, the law requires that a fiduciary, such as a trustee for pension funds, may invest the trust’s or fund’s money only in a list of securities designated by the state – the so-called legal list. In other states, the trustee may invest in a security if it is one which a prudent man of discretion and intelligence, who is seeking a reasonable income and preservation of capital, would buy. For example, under New York’s “prudent man rule” the Trustee is bound to employ such diligence and such prudence in care and management of the fund as, in general, prudent men of discretion and intelligence in such matters employ in their own like affairs.
PUD: Planned Unit Development. A type of community association usually indicating that the member owns their home and the land beneath it. The association may be responsible for some of the exterior maintenance.
RESPONSIBLE: Liable; legally accountable or answerable. Able to pay a sum for which he is or may become liable, or to discharge an obligation which he may be under.
RESPONSIBILITY: The state of being answerable for an obligation, and includes judgment, skill, ability and capacity. The obligation to answer for an act done, and to repair or to otherwise make restitution for an injury it may have caused.
SELF-MANAGEMENT: A term used to describe associations that performs all or most of the management functions without hiring a management company. This can include those associations who employ an on-site manager, but this type is not considered true "self management."
SHALL: Black’s Law Dictionary 6th Addition defines shall as the following:
“As used in statutes, contracts, or the like, this word is generally imperative or mandatory. In common or ordinary parlance (a particular style of speaking), and in its ordinary signification, the term “shall” is a word of command, and one which has always or which must be given a compulsory meaning; as denoting obligation. The word in ordinary usage means “must” and is inconsistent with a concept of discretion. It has the invariable significance of excluding the idea of discretion, and has the significance of operating to impose a duty which may be enforced, particularly if public policy is in favor or this meaning, or when addressed to public officials, or where a public interest is involved, or where the public or persons have rights which ought to be exercised or enforced, unless a contrary intent appears.
But it may be construed as merely permissive or directory (as equivalent to “may”), to carry out the legislative intention and in cases where no right or benefit to any one depends on its being taken in the imperative sense, and where no public or private right is impaired by its interpretation in the other sense.” [Emphasis Added]
SID: Special Improvement District and is usually the same thing as LID, but through a city or county.
SYCOPHANT: For those of you who don’t know what it means, it is a $5 word for a "suck up". Webster’s Dictionary defines it as: syc-o-phant (sik’e fent) n. One who seeks favor by flattering people of wealth or influence – syc’p-phancy n.
UNCONSCIONABLE: 1. (Of a person) having no conscience; unscrupulous <an unconscionable used-car salesman>. 2. (Of an act or transaction) showing no regard for conscience; affronting the sense of justice, decency, or reasonableness <the contract is void as unconscionable>.
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