Condos and HOA’s are also known as “Common Interest Realty Associations” (CIRA). While we all know community associations have their problems, at its core it is a great concept. Twenty Five percent ( 25%) of American homes are part of a common interest realty structure. It is important to familiarize yourself with the “governing documents.” Here is a easy guide to understanding Condo and HOA Documents:
Every member of a community association should be familiar with its governing documents. They are the foundation for community governance. You should have received a copy when you purchased the property, but they are easy to get if you can’t find your copy. You can get them from various sources. Try your manager, community association website, or other members of the association.
They can be intimidating with legal language, not used in regular conversation. It is important to not let them confuse you. You don’t have to understand every single line in it. Be familiar with the documents and you will be a better informed member of the community.
It’s important to not let your governing documents confuse you. So here we are presenting you with A Easy Guide to Understanding Condo and HOA Documents
Before we get into the finer points, let’s define what governing documents are. Lets break them down in the parts for a better understanding. Governing documents are a collection of legal documents. They set the rules for the association and define its legal position. The Documents can differ between one association and another. For the most part they all contain the following documents.
- Declaration of Covenants, Conditions and Restrictions (CC&Rs)
- Articles of incorporation
- Rules and Regulations
Getting hold of your governing documents and reading is what is important. It is also important to know the hierarchy of their authority.
When assembling the list above, the documents are in their order of authority. That means the higher it is on that list, the more important it is. Any conflicting language between the bylaws and declaration, the declaration will overrules. The declaration is then subordinate to Federal, State and Local laws. If there is a conflict in the documents that conflicts with Federal, State or local law, the law rules. This is important in understanding your Condo & HOA Governing Documents.
So what is a Declaration of Covenants? It contains some very important information. There is a review of the restriction on each owner’s property and the common areas. It it defines what an owner actually owns and what is common area. It will contain a guide for procedural matters. Some of them being, amending the governing documents themselves among other things. There will be an explanation of the obligations and rights of the owners in the association. It will have maps and plans that lay out the association’s location and the designs of its structures.
The next document would be the Articles of Incorporation. This is a document crafted by the original developer. It defines the community, making it clear to every owner that they are a mandatory member. The association is established as a non-profit entity, states its name, and purpose. In some states community associations are not registered as non-profit entities.
The Bylaws are often the most dense section. In it you will find things essential to the governance of the association. A few examples are, the number of board members allowed and their responsibilities. It states when and where meetings should convened. They define when and how meetings should be conducted. This section of the documents will also speak to voting right for owners, and rental restrictions. They will establish that the association can collect maintenance fees. What actions the association may take to collect fee. When a community sets a collection policy the board needs to consult bylaws. While the bylaws are low in the hierarchy they contain most of the important information.
Finally, we have the Rules and Regulations, which make clear what an owner can and cannot do in everyday life. Although low in hierarchy of authority. Bylaws they will be the flash point for conflict in the community. Rules and regulations are implemented by board approval. As a result, the unintended consequences of a new rule could create a stir in the community.
Rules and Regulations cover items dealing with everyday live. Such things as pets, parking, noise restrictions, moving regulations, and outdoor furniture. In some HOAs it even contemplates whether you can hoist a flag. Federal legislation provide the right to display a flag, its size may be restricted by the rules. Sometimes the bylaws will also address how the association will manage delinquent payments. A board can even craft a uniform collection policy and other policies and vote them in the rules. This is a sample of common items, and the list can go on and on.
If you are buying a home in a condo or HOA, it is very important you familiarize yourself with the rules. Failing to do so can result in some very unhappy circumstances. It is your responsibility to know what agreements you are entering. Your documents can mean the difference between a positive or unhappy residential experience.
Mitch Drimmer is a respected thought leader in his field and has led numerous continuing education classes in collections, His articles have been published in key trade journals and newspapers, and he is a speaker at educational seminars. Drimmer is also a former board member of the Florida Community Association Professionals (FCAP) and earned his company the distinguished FCAP Reader’s Choice Award for collections four years in a row. Throughout his career, Drimmer has worked with community associations to help them see their way through tough times, especially during the real estate crash. He is a passionate advocate for community associations and has participated in the legislative process over the years trying to bring fair and equitable legislation that serves community associations.
Drimmer earned a BA in History from Hunter College and served as CEO of Drimmer Industries, Inc. in New York City for 35 years.