University Terrace is a “common interest” development. A common interest development is a community that combines individual interests with property held and
managed in common. At University Terrace, there are individual ground leases for the condominiums, the single-family homes, and common areas. The common areas
include the recreational facilities, parks, fitness center, community rooms, private roads and other common facilities, which can be used by the whole community.
There are other common areas used only by the condominium residents.
Because there are common areas that are shared by some or all of the residents, a Homeowners Association is formed for the purpose of managing and operating the
common facilities within the community. The Association also has a number of powers and duties related to the governance of the community, such as architectural
review, enforcement of use restrictions and other responsibilities.
The Association, which is a nonprofit association, is run by a Board of Directors elected by the residents and subject to a Declaration of Covenants, Conditions
and Restrictions (CC&Rs), the Rules and Regulations, and Bylaws, which have been approved by the California Bureau of Real Estate. A budget is adopted each year to
cover the cost of the operation and maintenance of the common areas and establish a reserve for long term upkeep and restoration. Each resident will pay a portion
of the cost to the Association as described in the CC&Rs through what is commonly known as HOA monthly dues. If a common area, such as a community room, benefits
only the condominiums, then only the condominium units will pay the costs associated with that portion of the common area. The expenses that benefit only some of
the residents have a separate budget referred to as a “Cost Center”.