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HOA Rules: Less Is More

Written by on Tuesday, 21 September 2004 7:00 pm
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The owner's manual of every homeowner association are the governing documents, sometimes called Declaration, Bylaws, Rules and Regulations or CC&Rs (Codes, Covenants & Restrictions). The CC&Rs are usually drafted by attorneys that are knowledgeable about HOA law and practice, but not always. Some developers think CC&Rs are boilerplate (one size fits all) and may use documents from another project. This is ill advised since each HOA has its own unique needs and state HOA laws change almost every legislative session. This could lead to inappropriate or illegal provisions being included or appropriate provisions being excluded.

These anomalies aside, many Boards are consternated by the fact that the CC&Rs are so, well, vague. Rather than neatly laying out the parking and pet rules, they are only mentioned in general terms if at all. The collection procedure is barely addressed except, perhaps, the date homeowner fees are due. What about bounced checks, late fees and finance charges? The details are usually absent. This is crazy! How is the Board supposed to know what to do?

There is reason behind the apparent madness. The governing documents are intentionally left vague in many areas to allow the members to decide how they want things to run. This is particularly true of rules. Rule making does not require amending the governing documents since the authority to make (promulgate) rules is always granted to the Board. However one essential of rule making is to compile them in a Book of Rules so they don't get buried in Board Meeting minutes.

When it comes to making rules and policies, less is more. Only adopt those that are really needed. We live in a world of rules and laws. Think long and hard before adopting a rule that is governed by common sense. (Do you really need a rule against loud parties that disturb the neighbors?) A rule is useless unless it's enforceable. A parking rule that requires someone to sneak around recording license plates or a pet rule that requires taking pictures of dog doo doo is no way to spend a life or HOA money. The goal is to get most folks to willingly comply, not to set them up for confrontation.

When it comes to rule making, remember: "Locks keep your friend out." No number of rules is going to control someone who takes great joy in breaking them. To these folks, this adage applies: "Never try to teach a pig to sing. It's a waste of time and irritates the pig." Rather than trying to out-rule a scofflaw, personal persuasion or compromise is usually more effective. However, if the issue is important enough, like a resident dealing drugs, stockpiling garbage or raising pitbulls for malicious purposes, using law enforcement and the courts may be the most expeditious solution.

The HOA actually can establish rules that are stricter than city, county and state statutes and many do, especially in the area of zoning. For example, even though local zoning may allow certain businesses like daycare facilities, the HOA may prohibit them. Prohibiting all home businesses, however, is not reasonable. The business ban should be tied to its impact on the neighbors (parking, deliveries, noise, smell, dust, storing flammables, etc).

HOAs can also establish very stringent appearance and design rules which leave little wiggle room for creativity. These regulations can have a negative effect on market values when restrictions are placed on things like color and roofing. Color preferences change every 5 to 10 years. Requiring all buildings to adhere to a 1970s color scheme will cause values to fall. And those cedar shingles are now a roofing dinosaur. Cedar shingles are both a fire hazard and expensive to maintain and replace. New roofing alternatives have much longer useful lives, warranties, require little maintenance and have smaller price tags. When it comes to appearance rules, allow flexibility and review based on changing consumer preferences.

The Resolution Process is a great way to deal with complex issues like collections, parking and architectural design. Resolutions can be enacted without amending the CC&Rs and provide a template for defining the issue, penalty for violation and appeal process. The Resolution Process includes a member review of the proposed resolution prior to enactment. Adding this feature ensures greater compliance since all members have been put on notice and have been given a chance to comment. Resolutions can be recorded (and should be) so prospective buyers are put on notice of significant issues.

The Board does not have authority to make a rule or policy that contradicts the CC&Rs. To change the CC&Rs requires a vote of the appropriate number of members to amend them. The Board may enact rules, policies and resolutions that expand on and are in keeping with the CC&Rs. For example, if the CC&Rs state "The homeowner association may enact architectural design restrictions," the Board could enact a policy that states "No awnings, fences or play structures are allowed" and it would pass the test. The Board, however, is not required to pass design restrictions. The CC&Rs only provide that option.

Amending CC&Rs can be quite expensive. Sometimes there is a good reason to do so to remove an illegal provision or to conform with changes that have taken place in state or federal law. Amending CC&Rs should only be done in consultation with an attorney that specializes in HOA law. Many provisions in CC&Rs are interrelated and changing one can impact another. A good attorney understands how it all fits together. Once the amendment(s) are passed, the amended CC&Rs should be recorded so the world is put on notice.

If there are many substantial changes to the CC&Rs that are being proposed, they should be voted upon separately rather than lumping them together which could result in the good going down with the bad or controversial.

Expanding the CC&Rs is one of the Board's greatest challenges. It can be done by amending them or adding Rules and Resolutions. When expanding, take your time and get member input. Measure twice and cut once. Finally, it's okay to NOT make rules. Less in more.

For more on the Resolution Process, see the "Policy Samples" section of www.Regenesis.net .

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  About the author, Richard Thompson

Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.
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