Understanding your governing documents is essential to every association – without governing documents, an HOA would not exist! These documents serve a specific purpose in the community and allow the association to function.
An association board or individual board member may be held legally liable for failure to follow local, state, and federal laws, or to act in good faith based on reasonableness and good judgment. For these reasons, it is important that board members truly understand their association’s governing documents.
Related: Increase Participation at Annual HOA Meetings
Each document begins with a list of definitions. These definitions aid in understanding the provisions that follow, which are written in legal terms that most people may be unfamiliar with. It is important to note that any laws or statutes passed by federal or state authorities are above any association’s documents.
Documents and their Purpose:
Certificate of Formation
The Certificate of Formation (also referred to as a Certificate of Incorporation, or Articles of Incorporation) legally establishes the association as a nonprofit corporation. These documents are filed with the state to legally create the association as a corporation and allow for the formation of the board of directors, while setting the general powers of the association.
Recorded Maps
The recorded map shows boundaries in the community and provides corresponding numbers for individual lots. These maps, or plats, are recorded with the county and are used to establish the responsibility of maintenance and location of property.
Bylaws
Bylaws give procedures and rules for governmental operations. They are established to place guidelines on the internal affairs of the association. These documents include notice requirements, meeting procedures, quorum, association recordkeeping, and the roles of the officers of the board.
DCCRs
The Declaration of Covenants, Conditions, and Restrictions (DCCRs or CC&Rs) are the deed restrictions of the community. These documents define ownership of all elements of the community, such as common areas and lots, or units. They also establish the maintenance and repair responsibilities for common areas and/or each lot. These documents are very important in that they establish powers for funding the association via budgeting and assessments; the goals and purpose of the association are also included in these documents. These documents also contain the restrictions for the community. The degree to which the board has the ability to write additional rules and regulations varies – some allow the board flexibility, while others are explicit and/or more limited. With these documents, the board has the power to develop more concise rules and regulations, which must be consistent with applicable federal, state, and local laws. Other considerations included in the DCCRs (or CC&Rs) are architectural guidelines, which are provisions for how annual meetings are conducted, along with collections and covenant enforcement procedures.
Most governing documents can be amended if necessary, though the process is often difficult and must follow the guidelines for amendment, which is outlined in the document itself, or in state statutes. Legal consultation is always strongly recommended for assistance to ensure that the amendment process is properly completed.
Understanding the governing documents of your association is one of the first steps in making homeownership in your HOA the best experience it can be. It’s very important that board members review and understand the governing documents of the community in which they live. If you have any questions on community association governance, do not hesitate to contact us at Spectrum!
