Glossary 1

  1. Deferred Tax
    • Deferred Tax is the amount of future tax consequences attributable to temporary
    • differences that will result in net taxable amounts in future yeas, as
    • computed currently. Recognition and
    • measurement does not anticipate the tax consequences of losses or expenses
    • that may incurred in future years.`
  2. Developer Receivables
    • Assessments due from developers who are the legal owners of any unsold units and
    • are
    • generally responsible for their proportionate share of the assessments
    • relating to those units.
  3. Member Assessments:
    • amounts typically payable monthly required from each unit owner to cover the
    • CIRA's
    • operating expenses, plus a potential allocation to the replacement fund.
    • These are sometimes referred to as
    • maintenance fees", carrying charges", or in the case of
    • cooperatives, rent".
  4. Reserve Fund:
    • Reserve funds are accumulated for the major repair or replacement of existing common
    • area
    • components.
  5. Reserve Study:
    • A reserve study is a plan for setting aside funds for the future major repair
    • or replacement of the
    • association's common property. It requires an analysis of the common
    • property components (the physical analysis)
    • and the preparation of a long range funding plan (the financial analysis).
  6. Special Assessments:
    • Additional funds assessed of members to fund future major repairs and replacements as
    • an
    • alternative to or in addition to regular monthly assessments.
  7. Statements on Auditing Standards (SAS):
    • The 10 generally accepted auditing standards (GAAS) are interpreted
    • and expanded upon in Statements on Auditing Standards (SAS), issued
    • periodically by the Auditing Standards
    • Board of the American Institute of Certified Public Accountants (AICPA).
    • They provide the detail and guidance
    • needed to meet the 10 GAAS standards.
  8. SFAS
    Statements of Financial Accounting Standards
  9. covenant
    a usually formal, solemn, and binding agreement
  10. Plaintiff
    a person who brings a legal action
  11. Defendant
    a person required to make answer in a legal action or suit
  12. estoppel letter
    • is typically used in a transfer or conveyance of real property before the
    • Closing transaction. It is a document sent to a bank (or other lender), to a
    • homeowners' association (or condo association), to a city/municipality, or a
    • tenant requesting a payoff of a mortgage, assessments or taxes due, or rental
    • amounts due on a lease, to incorporate these amounts into the Settlement
    • Statement for the buyer and seller of the real estate. All assessments and
    • payments due must be incorporated into the amounts due at Closing and paid at
    • the time of the Closing. Some amounts may be pro-rated, but all must be
    • included in the Settlement Statement. The estoppel letter facilitates this
    • process.

    • "All assessments and payments due..." regarding an association
    • should also include and not be limited to monthly or quarterly maintenance
    • but ALSO any fines or other levies that are internal to the association and
    • have not yet been processed through the courts which would result in a lien.
  13. Statements on Auditing Standards
    • provide guidance to external auditors on generally accepted auditing standards
    • (abbreviated as GAAS) in regards to auditing a non-public[1] entity and
    • issuing a report. They are promulgated by the Auditing Standards Board of the
    • American Institute of Certified Public Accountants (AICPA), which holds all
    • copyright on the Standards. They are commonly abbreviated as "SAS"
    • followed by their respective number and title.
  14. Generally Accepted Auditing Standards, or GAAS, are ten auditing standards, developed by the AICPA, consisting of general standards, standards of field work, and standards of reporting, along with interpretations.
    General Standards

    • 1. The auditor must have adequate
    • technical training and proficiency to perform the audit
    • 2. The auditor must maintain
    • independence in mental attitude in all matters related to the audit.
    • 3. The auditor must use due
    • professional care during the performance of the audit and the preparation of
    • the report.

    [edit] Standards of Field Work

    • 1. The auditor must adequately
    • plan the work and must properly supervise any assistants.
    • 2. The auditor must obtain a
    • sufficient understanding of the entity and its environment, including its
    • internal control, to assess the risk of material misstatement of the
    • financial statements whether due to error or fraud, and to design the nature,
    • timing, and extent of further audit procedures.
    • 3. The auditor must obtain
    • sufficient appropriate audit evidence by performing audit procedures to
    • afford a reasonable basis for an opinion regarding the financial statements
    • under audit.

    • The new standards are in effect for audits of financial statements for
    • periods beginning on or after December 15, 2006.

    [edit] Standards of Reporting

    • 1. The auditor must state in the
    • auditor's report whether the financial statements are in accordance with
    • generally accepted accounting principles (GAAP).
    • 2. The auditor must identify in
    • the auditor's report those circumstances in which such principles have not
    • been consistently observed in the current period in relation to the preceding
    • period.
    • 3. When the auditor determines
    • that informative disclosures are not reasonably adequate, the auditor must so
    • state in the auditor's report.
    • 4. The auditor must either express
    • an opinion regarding the financial statements, taken as a whole, or state
    • that such an opinion cannot be expressed in the auditors report. When the
    • auditor cannot express an overall opinion, the auditor should state the
    • reasons therefore in the auditor's report. In all cases where the auditor's
    • name is associated with the financial statements, the auditor should clearly
    • indicate the character of the auditor's work, if any, and the degree of
    • responsibility the auditor is taking, in the auditor's report
  15. SSAE
    Statements of standards for Attest Engaements
  16. CIRA Funds:
    Funds comprised of member dues and contributions of capital.
  17. Condominium Association:
    • All unit owners in condominiums own their individual living quarters. They also
    • have
    • an undivided percentage interest in the common property that is inseparable
    • from ownership of the unit itself.
  18. Contributions of Capital:
    • Tax rules allow CIRAs to treat the following additional amounts as contributions
    • of capital
    • for tax purposes in certain circumstances: (1) Assessments for specific
    • capital improvements or the replacement of
    • personal property; (2) Litigation proceeds from developers for warranty
    • claims; and (3) Assessments received from
    • cooperative tenant shareholders representing amortization of mortgage
    • principal.
  19. Exempt Function Income:
    • Payments in lieu of dues (past, present, or future) and for under assessments
    • are
    • generally considered to be membership income or exempt function income.
  20. Expenditure Test:
    • AT least 90% of the association's expenses for the tax year must be for the
    • purpose of carrying
    • on one or more of the exempt functions of a condominium or homeowners'
    • association. Timeshare associations
    • must spend at least 90% during the taxable year for activities provided to
    • or on behalf of their members.
  21. Foreclose:
    • Condominiums and homeowners' associations may receive abandoned units or foreclose on
    • units for
    • nonpayment of delinquent assessments.
  22. Form 1120:
    • Most CIRAs are taxed on nonexempt function, nonmember income, or nonpatronage
    • income. They
    • generally are taxed as corporations. Like other corporations, cooperatives
    • file their federal income tax returns
  23. Form 1120 H:
    • A special corporate tax return for homeowners' associations, condominium
    • associations, and
    • timeshare associations.
  24. Gross Income Test:
    • The gross income test excludes from exempt function income any amounts that the
    • tax rules
    • exclude from gross income.
  25. IRC Section 277:
    • Residential condominium associations, homeowners' associations, and timeshare
    • associations
    • may elect to be taxed under IRC Section 277, which applies to certain
    • membership organizations.
  26. IRC Section 528:
    • Residential condominium associations, homeowners' associations, and timeshare
    • associations
    • may elect to be taxed under IRC Section 528, which applies specifically to
    • homeowners' associations as that term
    • is defined for tax purposes.
  27. Nature Test:
    • Amounts received from members must be paid solely as a result of membership in the
    • association. As
    • a general rule, they must be assessed ratably to all members.
  28. Source Test:
    • Generally,exempt function income must be received as membership dues, fees, or
    • assessments from
    • owners of residential units (in the case of a condominium association),
    • residential lots (in the case of a homeowners'
    • association), or rights to use or ownership interests in association
    • property (in the case of a timeshare association).
  29. CC&R:
    • Declaration of Covenants, Conditions, and Restrictions. This document creates the subject
    • association and
    • sets forth deed restrictions. Absent statutory authority, these covenants
    • become the authority to manage and
    • maintain common property in the development.
  30. CIRA:
    • Common Interest Realty Association. Organizations of property owner who own or have
    • exclusive right to use
    • their individual living quarters, and share exclusive use of certain common
    • property with all other property owners
    • in the development.
  31. Condominium associations:
    • All unit owners in condominiums own their individual living quarters. They also
    • have
    • an undivided percentage interest in the common property that is inseparable
    • from ownership of the unit itself.
    • Condominium associations generally do not have title to any real property
    • within the development.
  32. Homeowners' associations (HOAs):
    • HOA members own their own dwelling and the land on which the dwelling
    • sits. The HOAs, rather than the residents, have title to all of the common
    • property within the development.
  33. Common Law
    • refers to law and the corresponding legal system developed through decisions of
    • courts and similar tribunals (called case law), rather than through
    • legislative statutes or executive action.
  34. Easement
    • is a non-possessory interest to use real property in possession of another person
    • for a stated purpose. An easement is considered as a property right in itself
    • at common law and is still treated as a type of property in most
    • jurisdictions. In some jurisdictions, another term for easement is equitable
    • servitude, although easements do not have their origin in equity
  35. Fee Simple
    • is an estate in land. It is the most common way real estate is owned in common law
    • countries, and is ordinarily the most complete ownership interest that can be
    • had in real property
  36. Statue
    • is a formal written enactment of a legislative authority that governs a country,
    • state, city, or county. [1] Typically, statutes command or prohibit
    • something, or declare policy.[1] The word is often used to distinguish law
    • made by legislative bodies from the judicial decisions of the common law and
    • the regulations issued by Government agencies.
  37. SFAC
    • A document issued by the Financial Accounting Standards Board (FASB) covering
    • broad financial reporting concepts. The purpose of the SFAC document is to
    • provide a general overview of accounting concepts, definitions and ideas. It
    • is seen as a prelude to the statement of financial accounting standards
  38. Lis pendens
    • In current practice, a lis pendens is a written notice that a lawsuit has been
    • filed concerning real estate, involving either the title to the property or a
    • claimed ownership interest in it. The notice is usually filed in the county
    • land records office. Recording a lis pendens against a piece of property
    • alerts a potential purchaser or lender that the property’s title is in
    • question, which makes the property less attractive to a buyer or lender.
    • After the notice is filed, anyone who nevertheless purchases the land or
    • property described in the notice takes subject to the ultimate decision of
    • the lawsuit.
  39. Foreclosure
    legal and professional proceeding in which a mortgagee, or other lienholder, usually a lender, obtains a court ordered termination of a mortgagor's equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lienholders can also foreclose the owner's right of redemption for other debts, such as for overdue taxes, unpaid contractors' bills or overdue HOA dues or assessments
  40. equitable right of redemption
    a right under state law of a defaulted borrower to redeem his or her property up to the date of the mortgage foreclosure sale by paying in full the outstanding mortgage debt
  41. default
    • when a debtor has not met his or her legal obligations according to the
    • debt contract, e.g. has not made a scheduled payment, or has violated a
    • loan covenant (condition) of the debt contract. A default is the
    • failure to pay back a loan
  42. accreted
    to grow
  43. Contributed Capital
    • AN entry on the shareholders' equity section of a company's balance sheet that
    • summarizes the total value of stock that shareholders have directly purchased
    • from the issuing company.

    • Contributed capital is calculated by adding the par value of the shares to
    • the value paid that was greater than par value.
  44. Bankruptcy
    • is a legally declared inability or impairment of ability of an individual or
    • organization to pay its creditors.
  45. In Chapter 7
    • a debtor surrenders his or her non-exempt property to a bankruptcy trustee who
    • then liquidates the property and distributes the proceeds to the debtor's
    • unsecured creditors. In exchange, the debtor is entitled to a discharge of
    • some debt; however, the debtor will not be granted a discharge if he or she
    • is guilty of certain types of inappropriate behavior (e.g. concealing records
    • relating to financial condition) and certain debts (e.g. spousal and child
    • support, student loans, some taxes) will not be discharged even though the
    • debtor is generally discharged from his or her debt. Many individuals in
    • financial distress own only exempt property (e.g. clothes, household goods,
    • an older car) and will not have to surrender any property to the trustee. The
    • amount of property that a debtor may exempt varies from state to state.
    • Chapter 7 relief is available only once in any eight year period. Generally,
    • the rights of secured creditors to their collateral continues even though
    • their debt is discharged. For example, absent some arrangement by a debtor to
    • surrender a car or "reaffirm" a debt, the creditor with a security
    • interest in the debtor's car may repossess the car even if the debt to the
    • creditor is discharged
  46. In Chapter 13
    • the debtor retains ownership and possession of all of his or her assets, but must
    • devote some portion of his or her future income to repaying creditors,
    • generally over a period of three to five years. The amount of payment and the
    • period of the repayment plan depend upon a variety of factors, including the
    • value of the debtor's property and the amount of a debtor's income and
    • expenses. Secured creditors may be entitled to greater payment than unsecured
    • creditors.
  47. In Chapter 11
    • the debtor retains ownership and control of its assets and is re-termed a debtor
    • in possession ("DIP"). The debtor in possession runs the day to day
    • operations of the business while creditors and the debtor work with the
    • Bankruptcy Court in order to negotiate and complete a plan. Upon meeting
    • certain requirements (e.g. fairness among creditors, priority of certain
    • creditors) creditors are permitted to vote on the proposed plan. If a plan is
    • confirmed the debtor will continue to operate and pay its debts under the
    • terms of the confirmed plan. If a specified majority of creditors do not vote
    • to confirm a plan, additional requirements may be imposed by the court in
    • order to confirm the plan.
  48. Systemic
    Relating to or part of a common system
  49. tax home
    • is the entire city or general area where your main place of business or work
    • is located, regardless of where you maintain your family home.
Card Set
Glossary 1