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Doctoring the HOA Docs

Written by on Tuesday, 28 June 2011 7:00 pm
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One of the confusing aspects of homeowner association governing documents (aka CC&Rs or Declaration and Bylaws) is that they are often vague and difficult to understand. Part of the issue is that they are usually written in “legalese” instead of plain English. So, your HOA may be stuck with the “whereas, heretofore and witnesseth” style of documents. Gadzooks!

Besides the challenges of deciphering a foreign language (to everyone but attorneys), the governing documents are vague by design to allow customization. Really! In other words, the documents grant authority to the board to make policy decisions so the board can enact most policies as long as those policies are not contrary to the governing documents. Money policy matters like special assessments sometimes require approval by a majority of the homeowners.

In that vain, there are several issues that should be expanded upon as custom policies:

  1. Money Collection

  2. Parking Regulations

  3. Architectural Design

  4. Pet Regulations

  5. Rental Restrictions

There are others but these issues are common to most HOAs. They are complex and can’t be addressed by simple “Thou shalt not” rules. They each require a comprehensive definition, method of enforcement, penalties and appeal process. By using the Resolution Process , they can be fully explored and developed.

A big benefit of enacting Resolutions is that they don’t require amendment of the governing documents. They don’t (or shouldn’t) modify the governing documents but merely formalize the authority already granted. If the board wants to enact a policy that contradicts the governing documents, the governing documents should be amended by an appropriate vote of the members.

There are times when the governing documents should be amended:

1. Illegal Provisions. Older documents may have provisions that are illegal under current statutes. These usually involve issues related to restricting residency because of age, sex, race, familial status, etc.

2. Unworkable Provisions. Some well intentioned drafters put money or percentage limits in the documents to control board spending. (Example: “The board shall not spend more than $500 without owner approval” or “The board may not increase the annual budget by more than 3%.”)

While these limits may have made sense in 1972, if the budget was too low to begin with or inflation makes them handcuffs instead of restraints. The board needs reasonable guidelines and the ability to pay for routine HOA expenses. Only extraordinary expenditures should trigger a requirement for owner approval.

3. Changing Number of Directors. Sometimes, the number of directors called for is unrealistically high (Example: 7 or 9 directors for a community of 30 homes) and finding the required number is a constant challenge. If the HOA does not fill the positions by election or appointment within a reasonable time frame, it is in violation of the governing documents. These high requirements could be reduced to 3 or 5 director positions (always choose an odd number to ensure a voting majority).

4. Bad Drafting. Unfortunately, some documents have been drafted by attorneys that should be in another line of work or cobbled together by developers that were too cheap to hire a knowledgeable attorney. These documents that are either confusing, wrong or both.

Caveat Doctorus (doctor beware). As with having too much rope, if the board messes with the documents too much, it may end up hanging itself. Some things in the documents may be annoying but don’t require fixing. (Example: References to the developer which no longer apply once the developer is gone. There is no need to remove or amend these references.)

Don’t perform document surgery alone. While amending documents may seem straight forward, the board should always consult with an attorney that specializes in homeowner association law to ensure that the amendments comply with current statute and common practice. Amended documents usually need to be properly filed with state authorities to be legal. The attorney knows both the amendment and filing process.

When doctoring the docs, first make sure surgery is needed and then assemble a competent surgical team. Then, only fix or remove what’s necessary to eliminate confusion and to make them “come alive”. Doc Doctor....please report to surgery.

For more innovative homeowner association management strategies, see 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.