Establishing HOA Rules and Regulations

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0160-C-Board-Effectiveness-Article-2-Image.jpgThe board does the essential work of maintaining the integrity and value of a community by establishing HOA rules and regulations that protect resident’s investment as a homeowner. These rules provide a standard structure for all residents to follow, helping your association run more effectively and keeping your community safe. As a board member, it is crucial to understand establishing regulations and implementing rules that benefit the community.

This article explores the ins and outs of establishing HOA rules and regulations by examining governing documents, creating rules that benefit the community and communicating with residents for smooth implementation and enforcement.

Read and Understand Governing Documents

HOA rules protect the property and enhance the value and aesthetics of the homes in the community, but they aren’t established arbitrarily. Board members must operate within their community’s governing documents and local, state and federal laws to create new rules. These governing documents include articles of incorporation, covenants, conditions and restrictions (CC&Rs), and bylaws and establish what an HOA can and cannot do and the structure of how an HOA board operates.
 

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Corporations must file articles of incorporation to operate in the United States and Canada, and your board must include that filing within its governing documents. The articles of incorporation must be filed with the state that the HOA is registered in and define the legal name, address and corporate status of the HOA.

Covenants, conditions and restrictions (CC&Rs) establish board members' rights and obligations must be filed with the state and are legally binding and permanent. They are sometimes referred to as a master deed or declaration, and they outline the architectural standards for the community. They also state maintenance and insurance obligations, rule enforcement, property-use restrictions and assessments. While rules and regulations can be changed easily, any modifications to CC&Rs require a board vote, and then they must be re-filed with the state.

Subsequently, community bylaws establish the operational structure within the board. They address board member duties, responsibilities, elections and voting, how many meetings boards have annually and the length of board members’ terms in office. They also list specifics about meetings and budgets.  Like covenants, conditions and restrictions, the community’s bylaws also require a vote by the membership to amend. 

A community’s governing documents outline how the board adopts new regulations. All rules and regulations must stay consistent with the governing documents, and in some cases, cannot be established without a homeowner vote. And before a board implements new rules, they should get feedback from an attorney to ensure that the new regulations are compliant with state laws.  

Establish Functional HOA Rules and Regulations

Once the board has reviewed its governing documents, board members are ready to draft new HOA rules and regulations. The first step to establishing rules is to err on the side of common sense and make sure that new regulations solve problems, not exacerbate them. 

When drafting new rules and regulations, it is important to be fair and consider the community.  Rules should enforce things that improve the community, keep the residents safe and increase property value.
It is also essential to assess the long-term value of new rules. What outcomes does your board expect? Are they achievable? Make sure that new regulations solve a problem now and don’t create new issues in the future.

So, what kind of HOA rules and regulations do boards implement in communities the most?
A board creates rules and regulations for safety and maintenance and addresses issues within their community. The more common rules that boards create or modify are rules that regulate parking guidelines, trash and recycling, pet restrictions, decoration and maintenance standards, and home occupancy and rental restrictions. Often, rules can pertain to new regulations regarding safety protocols for amenities and community areas like pools and gyms.

Boards create these rules through amendments, and new rules mustn't supplant the governing documents, municipal codes and ordinances or state laws. They should always enhance or improve the community's safety, value and maintenance, and not encroach on residents' personal lives. Typically, the board can create rules and regulations without approval from the residents, but they should consider the residents' input via meetings.

A board can pass four different types of resolutions:

  • Policy Resolutions – These resolutions affect owners’ rights and obligations, usually about common areas, recreational areas, enforcement and architectural guidelines. Boards should seek community input before voting on them.
     
  • Administrative Resolutions – Resolutions that encompass the board’s operations and pertain to meetings, finances and other administrative functions.
     
  • Special Resolutions – These resolutions address specific policies, particular violations and exemptions.  
     
  • General Resolutions – Resolutions that address board decisions regarding routine procedures like budget and contract approvals.
     

While it is essential to create new rules, it’s also prudent to revisit old rules and regulations to make sure that they still serve their intended purpose and still apply today. Your community is constantly growing and evolving, and part of the board’s responsibility is to make sure that the rules continue to evolve, too. Sometimes state laws will change the community’s need for specific rules, or an emergency will spur the need for a regulation to be implemented. It is best to revisit your rules and regulations annually to review that they are still relevant and not outdated. Board rules may be added to, amended or repealed at any time by the board of directors.

Communicate Rule/Policy Changes

When establishing new regulations for your community, be clear and concise when communicating with residents. Educating residents is key to getting them to comply and follow the new rules.
When it comes to communicating with residents, the board should:

  • Clearly state the reason for setting the new policy         
  • Explain what new rules entail
  • Explain how they will be enforced
  • Enforce them consistently

Communicate to all residents via multiple channels like email, message boards in common areas, the community’s newsletter, social media and even mail.

Though people don’t usually think of new rules as exciting or welcome news, sometimes a rule change means that residents have access to more parking or can do more extensive landscaping. It is essential to keep residents in the loop about new regulations because not only does it help them to be compliant, but it also can help with community engagement and resident satisfaction.

While most residents will comply with policies, it is important to remember that every community has a small percentage of compliance issues. That is why it is essential to draft a detailed enforcement plan that lays out what steps will be taken if a resident violates a regulation. That includes initial warnings, written notices, fines and legal next steps so that residents understand the process and the penalties for breaking the rules.

Enforcing the rules is key to maintaining the property’s value and the residents’ safety, so make sure that the community enforces them consistently. It is crucial to be fair when drafting new regulations, and it is equally important to enforce them fairly. That means that violations are dealt with the same way across the board, and there should be no preferential treatment to any residents.

However, there are some cases where exceptions can be made. Boards should review all violations on a case-by-case basis and pass a special resolution if necessary. For example, suppose a community doesn’t allow dogs over a certain weight. In that case, they may pass a special resolution to allow a service dog that exceeds the weight limitation in their pet policy. A board must consider all violations individually to determine if exemptions should be made.

Your board can create new HOA rules and regulations that enhance not only your community but also your residents’ lives. FirstService Residential is here to guide you towards establishing rules that make sense and make improvements. For more information about governing documents, rule enforcement or areas where your board can improve, contact FirstService Residential today.

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Thursday November 04, 2021