Jun11

The Nitty Gritty of Your Governing Documents

Homeowners are often overwhelmed at all the information contained in their HOA’s governing documents. It’s no wonder— an association’s covenants, conditions & restrictions (CC&Rs), bylaws and rules & regulations are packed with information, some of which is written in dense legalese. 

When we published our article about “Understanding the Differences between CC&RS, Bylaws and Rules & Regulations,” we covered the fundamental differences between each of these important governing documents and how they support smooth HOA management.

Today we’re going to break it down even further.

Covenants, Conditions & Restrictions (CC&Rs)

CC&Rs outline the rights and obligations of the association to the membership and vice versa. Here are more detailed definitions of the types of issues that are covered in this legally-binding document:

  • “Property-use restrictions” – We’ll be honest, this is the piece of the document that everyone hates when they want to make changes to their own home, but loves when their neighbor is trying to paint their house purple. It’s the part that states that a homeowner has to care for their landscape and can’t leave a broken car in the driveway for months. Remember, property use restrictions aren’t meant to be punitive. They’re meant to preserve property values by maintaining a set of standards to ensure the community’s beauty.
  • Maintenance obligations for the HOA and individual members” – This articulates the aspects of maintenance that the HOA is responsible for versus what you as a homeowner are required to cover.
  • Mechanisms for rule enforcement and dispute resolution” – This section outlines exactly how enforcement of the various association rules will take place, including the exact process and timeline for warning letters, fines, etc. It will also articulate the role that your HOA management company plays in enforcement.
  • “Lender protection provisions” — This section details the protections the lender is entitled to, because lenders or mortgage holders are technically part owners in a community and therefore have an interest in how the association is run.
  • Assessment obligations” – This is a fancy phrase for “monthly dues.” This section details when you pay and how your dues are calculated. Some associations have variable assessments. For example, some condos calculate assessments based on square footage, not a flat rate. So, if your neighbor pays more (or less) than you, there’s a reason why—and it’s in your CC&Rs.
  • “Insurance obligations” – These are requirements that associations and sometimes homeowners must meet to maintain adequate insurance. It also includes requirements for supplemental insurance, if required (for example, insurance that covers use of common areas during your private event, etc.)

Read more: HOA Living: How to Read Your CC&Rs.

Bylaws

Bylaws outline day-to-day HOA management and administration. As a non-profit corporation, HOAs are required to abide by a clearly defined system of governance. Here’s a bit more detail about exactly what is in your association’s bylaws:

  • Frequency of HOA board elections” – Every association has the right to structure the frequency of elections in a way that makes the most sense for them. For example, many associations choose to stagger elections (elections for certain seats take place on odd years, others on even years) to maintain continuity and ensure that there is never a full turnover of the board at one time.
  • Process for nominating and electing new board members” – This section establishes the protocols for the elections themselves: candidate nomination process, campaign restrictions, voting locations, absentee or proxy voting rules. Every association’s election rules are different.
  • Number of members that serve on the board at one time” — There is a set limit for the number of seats on an HOA board and there should always be odd number so as to avoid tie votes. This section of the bylaws may also state that if an association lacks sufficient candidates for board positions, the board may nominate members to fill open seats.
  • Length of board member service terms” — This guideline clearly articulates how long a board member is required to serve in their position. Most HOAs do not place a limit on the number of terms a board member can serve. As such, we have seen some HOA members serve on their boards for close to twenty years. It’s rare, but it does happen.
  • Meeting frequency and quorum requirements” — This establishes requirements for meeting, as well as the number of board members that are required to be in attendance (“quorum”) for the meeting to be officially recognized.
  • Duties and responsibilities of board members” ­– This section is a must-read for anyone who is curious about what it’s like to serve on the board of an HOA, as it outlines the board’s obligations and authority. Remember, board members receive no special accommodations in exchange for their service. They must follow the same rules as the rest of the membership or risk being penalized equally.

Read more: Important Association Management Terms You Should Know.

Rules & Regulations

Like we mentioned in the previous article, rules & regulations cover anything that has not already been outlined in an association’s CC&Rs or bylaws. As such, each community’s rules & regulations will be entirely unique. (Fun fact: There is always a provision in the CC&Rs that allows for rules & regulations to exist in the first place.)

One of the main benefits of including rules & regulations in an HOA’s set of governing documents is to allow the community to be more dynamic in its governance. Depending on each HOA’s specific structure, rules & regulations can usually be amended by the board or membership. Meanwhile, changes to an HOA’s CC&Rs require filing official documents with the state. For example, if an HOA wants to change parking restrictions, refiling the association’s entire set of CC&Rs with the state may cause an undue burden. Therefore, it’s best to include that type of provision in the rules & regulations, which are much easier to change.

Governing documents are a detailed description of life inside your HOA and your association’s vision for the future. Take the time to read them. If you have any questions about where to find specific information or unclear about anything you read, reach out to your property manager, who can explain it all.

Want to know more about what’s in your governing documents? Our expert HOA managers can help.

Posted by on | Categories: Community Management, HOA Board, HOA Management, HOA Rules.

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