All associations, whether condominiums or homeowners associations, have a set of governing documents that…well…govern how that association is run. Many homeowners and even board members are unfamiliar with these documents, use the terms for them interchangeably, or don’t understand that there is a hierarchy within the documents themselves. Understanding what each documents should contain and the “importance” of each document is essential to running your association properly.
In order of their level of “importance” in the hierarchy, here is a list and brief description of the governing documents:
1. Declaration or CC&Rs. This documents is basically the charter document for your condominium or homeowners development. In theory, the Declaration/CC&Rs should contain all of the property- and use-related information about your association. Examples of what should be in this document include a description of the development as a whole, descriptions of the units/lots within the development, percentage allocations for each property, restrictions on use, and more. In fact, restrictions on the use of your unit/lot must be contained in the Declaration or CC&Rs in order to be enforceable. This is one mistake many boards make – they adopt restrictions on use (such as bans on smoking or pets in a unit) in their Bylaws or Rules and Regulations without realizing that those provisions are unenforceable.
2. Bylaws. The bylaws basically tell you how your association should be run, administratively and procedurally. Bylaws contain information about voting processes, quorum requirements, how your Board is elected, how Board meetings and Association meetings are run, and more. Your Bylaws may not contain restrictions on use or other property-related restrictions/information, nor should they address issues such as rules of conduct in the common areas. Consider the Bylaws your how-to manual for running your association, not for controlling what people do in their units/on their lots or in the common areas.
3. Rules and Regulations. Most Declarations/CC&Rs will contain a grant of power allowing the Board of Directors to regulate certain issues in your association. For example, the Declaration might say “no large dogs,” but who decides what a “large” dog is? Or your CC&Rs might grant the Board authority to fine owners for non-compliance with the governing documents, but what is the fine policy? How much are the fines? Your Rules and Regulations are the place for details such as this. Your Board may use the Rules and Regulations to (1) clarify issues that are left ambiguous by the Declaration/CC&Rs; (2) set rules of conduct for owners in common and limited common areas; (3) describe the fine policy your association must follow in fining owners; and more. Rules and Regulations may not restrict owner behavior inside of the owner’s unit/lot unless that behavior directly affects other owners in their unit/lot (i.e., noise restrictions).
4. Collection Policy. How many owners do you know who have read – and understood – all of the previously mentioned documents for your association? Many Board members have not even done so, and even fewer non-board-member owners do. Yet all owners are required to abide by the terms of all of the governing documents. A collection policy is an excellent tool to (1) put owners on notice of what happens when they don’t pay; (2) synthesize the collection provisions of your governing documents in clear, plain English; (3) cover issues left open by the Declaration/CC&Rs (i.e., the amount of the late fee); and (4) establish a uniform way of dealing with delinquencies on a uniform timeline.
There are a few other documents your association might use for governance issues, including Board resolutions or possibly a separate fine policy. But these four documents cover the main documents and the basics of what they should contain.
As for the hierarchy, what it means to your association is that the Declaration/CC&Rs are the grand poo-bah of documents, and the provisions thereof cannot be contradicted by any of the “lesser” documents. So if your Declaration says you charge 10% annual interest on delinquencies, you can’t adopt a Collection Policy that says you’ll collect 12% interest annually.
If you are confused about the governing documents for your association, or if you believe your association is using the wrong documents for different purposes, talk to an attorney experienced in community association law for advice and information to ensure your association is on the right track. If you have any questions we can answer, please feel free to leave a comment or contact us directly. We look forward to continuing this conversation with you in our future posts!