HOAs offer a safe, comfortable environment. They also come with a seemingly endless list of rules, and this can be challenging for homeowners and board members. These rules for the running and requirements of the HOA are detailed in at least three different governing documents. And of course, there is also state law.
Board members are responsible for implementing the requirements outlined in the governing documents, and referencing them frequently. So it is important to understand the purpose of each document, and which ones apply to different issues or concerns. Homeowners and board members may sometimes be frustrated by all of the rules, but they are in place for a reason. Without them, the community would not exist or run as well as it does. There would be no structure or safety.
This all makes sense, right? Hold on, because there is a catch. As mentioned, there are usually three different governing documents for HOAs. What are the differences and which document should you go to when making decisions? We are going to review the purpose and general content of each type of document to help make it a little easier to figure out which document is needed for a particular situation.
The governing documents do run in a hierarchy, similar to federal, then state, then local law. They are called the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, and Rules/Restrictions.
There are also articles of Incorporation, but they do not impact the running of the organization. They are filed at the state level, and just legally establish the name and address for the HOA, the management company if there is one, and a statement establishing the corporation is a non-profit that will run the association. Similar to what any corporation files with the Secretary of State. Since it primarily checks a legal box, we will not go into further detail on this document.
Declaration of Covenants, Conditions, and Restrictions (CC&Rs):
These are the first documents drafted for an HOA, and at the top of the governing hierarchy (after state laws). The CCRs are created at the very beginning of developing the community, and generally, determine what a property owner may do with the property. They are said to “run the land” because they rule the property no matter who owns it. Because they govern the real estate, they have to be filed in order to appear in the “chain of title” for the property.
The CC&Rs usually contain:
- Language establishing an HOA;
- A description of the property covered;
- Guidelines for annual and special assessments for common expenses;
- Easements for the HOA and utility companies across common areas and lots for maintenance of the common property, landscaping, drainage areas, and utilities;
- Restrictions on a lot and home size;
- Architectural restrictions and provisions for the establishment of an Architectural Review Committee;
- A description of the common areas and amenities;
- Restrictions on use, which could be:
- Storage of commercial vehicles, trailers, boats, RV
- Pets (e.g., vicious or dangerous animals)
- Placement of signs, flags, or “yard art”
- Restrictions on the rental of homes.
As you may know, under the law, HOAs fall into the corporation category. And one of the times this matters is requiring bylaws. Just like every other corporation, HOAs will need bylaws to determine how the “corporation” is run. If CC&Rs cover the “what” of the HOA, the bylaws cover the “how.” They are next on the hierarchy ladder and establish the structure of the day-to-day governance of your association. This includes things like:
- Description of the various classes of membership and their voting rights;
- Guidelines for calling and holding meetings of the members;
- Powers and duties of directors and officers;
- Provisions for the establishment of fiscal policies (budget ratification, the establishment of reserve accounts, the authority to hire accountants and attorneys);
- Indemnification provisions for the directors;
- Protocol for amending the bylaws;
- Financial provisions, such as the establishment of reserve accounts.
Rules and Regulations
And then we get to the rules and regulations. Since the CC&Rs were written at the very beginning of the creation of the HOA, the needs of a community often aren’t fully clear until residents move in. So the rules/regulations are created to guide the administration of the CC&Rs. However, they cannot be more restrictive than the CC&Rs or overrule them.
Some commonly-found rules are:
- Rules on the use of the common areas;
- Architectural and landscape guidelines;
- Exterior maintenance guidelines;
- Parking regulations;
- Pet policies.
You probably see some similar items listed here as in the CC&Rs, which can be confusing. Once you are in the groove of working on the board, it will be second nature, but we’ll go over an example of how the documents complement each other based on the guidance given above.
You will see “pet” in both the CC&Rs and rules sections of this article. The CC&Rs may outline whether pets are allowed at all, or how many allowed per lot. The rules might detail the pet cleanup requirements in common areas. The rules could not however ban pets if they are allowed in the CC&Rs.
When the Documents Contradict Each Other
In some states, the state law will provide the specific hierarchy of the documents. Whether that is the case or not, some general rules of thumb are that federal or state law is at the top of the chain. Then the documents’ importance follows the same pattern as to when they were created. And the higher the governing documents go in the chain of command, the more difficult they usually are to amend. For example, the CC&Rs are the first HOA documents created, will overrule a conflicting bylaw, and may need the votes of 2/3 of the homeowners in order to be changed. Rules will not overrule any other documents if there is a conflict, and often can be changed by a simple board vote.
There will still be many times there is a question about whether a rule is contradicting something in the CC&Rs, especially if a resident feels the rule is unfair. Using the same pet analogy as above, an example could be that the CC&Rs simply say that pets are allowed. The board then wants a new rule dictating that no pet can be over 50 lbs. Does this contradict the CC&Rs? That would have to be determined.
Another scenario could be that the CC&Rs say pets are allowed, but then some problems are caused by aggressive dogs in the neighborhood. A rule could be created saying all pets must be on leashes when off of the homeowner’s property. This would still fall within the CC&Rs.