How do “Deed Restrictions” translate into “Please clean your dirty mailbox?” That question is not as complex as it seems. In this next segment of What is an HOA? – were going to follow the trail from the Deed Restrictions concept we learned in the last segment to Governing Docs as they go hand in hand. In this segment, we’re specifically going to learn about the following governing documents, so you understand what they are when you hear them discussed, and you’ll also know what to ask for up front before you buy or down the road when you have a specific question. The examples below pertain to a typical HOA.
- Covenants, Conditions, and Restrictions (CC&Rs)
- Articles of Incorporation
- Bylaws
Covenants, Conditions, and Restrictions (CC&Rs)
All the above documents are collectively referred to as “Governing Documents” as they all govern very specific aspects of a Deed Restricted Community. The HOA starts with the first document called Covenants, Conditions, and Restrictions. It’s commonly abbreviated “CC&Rs” but because we are fans of the great rock band of the 70’s, we’re going to refer to them here as CCRs dropping the “&”. The CCR’s are also sometimes referred to as the Declaration and then there is a Declarant. The Declarant is usually the developer who builds the community. So, for simplicity we can think of Declarations and CCRs as being the same document.
The CCRs outline right in the beginning of the document among other items, the naming of the community, the formation of the nonprofit organization that will become the HOA (discussed in Articles of Incorporation below), and intention that all properties covered by the declaration are subject to the “covenants, restrictions, easements, charges, and liens, as set forth.
The CCRs will contain various Articles or sections that outline specific information. This is not to be confused with Articles of Incorporation explained later. Below are the typical Articles contained in CCRs:
Article 1 – Definitions: This section will define all the important terms used throughout the document. Terms such as Board – “Board” shall mean the Board of Directors of the Association.
Article 2 – Purpose: This section will typically outline the responsibilities related to the common area upkeep.
Article 3 – Property Rights: These are typically high-level dos and don’ts of the community such as the owners’ rights or limitations of their use of common areas. “Don’ts” can include things like you can’t raise livestock in the community park or build your own dock in the community pond. May sound funny but these are actual documented item examples.
Article 4 – Membership and Voting Rights: This section is worthy of special attention. This section will specifically include verbiage that says whether the HOA is Mandatory or Voluntary. You may see a sentence that looks like “Every Owner of a Lot which is subject to assessment shall be a member of the Association, subject to and bound by the Declaration.” – if you see something that looks like this, buyer beware, you have been warned of what you are agreeing to.
Article 5 – Rights and Obligations of the Association: This outlines concepts that are sometimes misunderstood, that the Association is responsible for management. Read that line again. The ASSOCIATION IS RESPONSIBLE FOR MANAGEMENT. The Association MAY hire a manager to ASSIST but that does not relieve the Association itself of the management responsibility.
Article 6 – Covenant for Maintenance Assessments: This section outlines the various ways in which you will be charged assessments and for what. Keep an eye out here for limits on annual increases and compare that to the proposed budget sent out. If it exceeds the limits without a full vote, you may have recourse. You’ll also find information on liens and foreclosure ability of the Association.
Article 7 – Plan of Development: A brief discussion on the actual developer plan for the community and where it can be located.
Article 8 – USE RESTRICTIONS: This is capitalized because you’ll really want to read this section line by line, word for word. This is where the connection between Deed Restriction and “Please clean your dirty mailbox” can be located; however, it may not be specifically iterated as such. For example, you may have a section that says the following:
Lot and Dwelling Upkeep: All Owners of Lots with completed houses thereon shall, as a minimum, have the grass regularly cut and all trash and debris removed. The Owner of each Lot shall maintain the Dwelling located thereon in good repair, including but not limited to, the exterior paint and appearance of the Dwelling. If a Lot fails, in Board’s sole discretion, to maintain their Lot or Dwelling as required herein, the Board, after giving such Owner at least ten (10) days written notice, is hereby authorized, but shall not be obligated, to maintain that Lot and Said Owners shall reimburse Association for actual costs incurred therewith.
That’s a bunch of legal sounding words but what does it all mean? Well, it basically says that you are being told upfront that you need to maintain the property, but it also says that the Board has discretion to determine if you’re doing a good job or not. If the management company, acting on behalf of the Board determines that your mailbox is dirty – guess what, you’ll receive a letter to comply.
Does this mean that the management company has discretion? Not really, you have the right to challenge the management company’s discretion to the Board of Directors. The Board has the discretion, not the management company. If the Board determines that the management company is being overly critical, the board being the actual entity responsible for management will correct the management company to comply with the Board’s directives for how critical to be.
Article 9 – Architectural Control: This section outlines the function of the Architectural Control Committee (ACC) sometimes referred to as Design Review Board. The ACC is typically appointed by the Board of Directors and as such, any decision can usually be appealed to the Board of Directors. The CCRs may be worded to give the ACC broad discretion; however, Florida Statute 720.3035 limits areas of discretion. Read this section and compare it to the law in your state and make sure your ACC is not exceeding their authority. See Florida Statute 720.3035 here.
Article 10 – General Provisions: As the name suggests, these are general provisions such as the duration of the initial Declarations and their automatic renewal and procedure to cancel the HOA via vote.
Article 11 – Mandatory Procedures: Typically refers to legal proceedings involving the Declarant (developer) but may have other clauses that pertain to the Association.
That was a lot of information but important to know if you need to quickly look something up. The actual article numbers, sections, etc. may vary from Association to Association but should follow the basic principles here.
Articles of Incorporation
These last two governing docs pertain to the HOA itself. One, the Articles of Incorporation may not get a lot of fanfare as this document is really just the official document filed with the state to create the Association similar to Acme T-Shirts Inc would file paperwork to incorporate but with added information regarding the HOA such as tying the HOA to the Community. Example Really Awesome HOA Inc. is responsible for the community of Really Awesome. It also spells out the minimum and maximum number of Board Members and what Officers position the HOA will have – typically President, Vice President, Treasurer, and Secretary. Special note – it’s a misconception that the Officers and Board Members must be the same people – this is a myth. Just like any other corporation, the Board of Directors can select other people who may not even be members of the community for these roles. Check your docs to be sure.
Bylaws
Not to be confused with the CCRs, Bylaws are the rules created for and by the Board of Directors. The board cannot create a rule that is in conflict with the CCRs; however, the board can create rules that dictate the day-to-day operations of the Association itself. After the initial Bylaws are recorded, the board may vote on specific resolutions and have them added to the Bylaws. Some examples of this is how violations are addressed, how fining is handled, and when assessments are to be sent to an attorney for collections.
The Bylaws also will go more into depth on officer positions and who does what.
In Summary
We discussed the main governing documents for a typical HOA – the example above pertained to an HOA which is usually a Planned Unit Development (individual single family houses in a community), not a Condominium. Condominiums have many more restrictions that are outlined and deserve their own article and we’ll cover that in the future. For this article, we learned that the ever-powerful Declaration of Covenants, Controls, and Restrictions create the Deed Restrictions and rules of the properties, the Articles of Incorporation create the HOA itself, and the Bylaws spell out how the HOA manages the community.
Disclaimer:
Marko Dowgal is a licensed Community Association Manager in the state of Florida. The preceding article and subjects discussed herein and in subsequent articles are not intended as specific legal advice and are subject to change based on the rules and regulations specific to these topics. Changes occur from time to time and our opinions may change based on updated information. For questions, please contact Dowgal Community Association Services. For legal advice, please contact a qualified attorney in your state.
