HOA “Rules” Must be Reasonable and Properly Adopted to Be Enforceable

The governing documents for a homeowners association consists of several different documents that play a part in the management and operations of the homeowners association. Such documents typically include such items as Articles of Incorporation, Bylaws, Declaration of Covenants, Conditions and Restrictions (“CC&RS”), Policies and Procedures, and Rules.

Homeowners’ association rules are rules or regulations that apply to the management and operation of a homeowners association and/or a common interest development. The rules and regulations facilitate the association’s conducting of its business and affairs and typically pertain to such things as:

• Use of the association’s common areas.

• Use of the association’s exclusive use common areas.

• Use of an owner’s separate interest.

• Aesthetic and architectural standards.

• Alteration of separate interests.

• Discipline of members for violations of governing documents.

• Procedures for the imposition of penalties on members.

• Collection of delinquent assessments and payment plans.

• Assessment disputes.

• Election procedures.

The rules and regulations that are part of a homeowners’ association’s governing documents are adopted by the association’s board of directors. Unlike the CC&Rs, the association’s rules that are adopted by its directors are not presumed to be reasonable and valid. When challenged, a rule or regulation must be found “reasonable.” A determination of reasonableness takes into consideration relevant facts that pertain to the common interest development as a whole, and not just the interests of a particular homeowner that may be challenging the rule.

Rules and regulations adopted by homeowners’ association directors will generally be upheld by a court unless they are determined to be wholly arbitrary, violate a fundamental public policy, or impose an unreasonable burden on the use of land (the burden far outweighs any benefit). Generally, enforceable rules and regulations that have been adopted by an association’s board of directors meet the following criteria:

• The rule or regulation is in writing.

• The directors had the authority to adopt the rule or regulation (authority is conferred by other governing documents such as Articles, Bylaws, or CC&Rs).

• The rule or regulation does not conflict with applicable federal or state laws, or other provisions that are contained in the association’s Articles, Bylaws, or CC&Rs.

• The rule or regulation was adopted in good faith and in compliance with applicable requirements in state laws and/or the association’s governing documents relative to the adoption of rules and regulations.

• The rule or regulation is reasonable.

State laws and/or an association’s Bylaws or CC&Rs will typically specify the procedural requirements that must be complied with by a board of directors in connection with the adoption, amendment, or repeal of association rules or regulations. For example, in California, before association directors can adopt or amend an operating rule that does not involve an emergency situation, the directors must provide the association members with at least 30 days advance written notice of the proposed rule or rule change. In addition, the notice must include the full text of the proposed rule (or rule change) and a description of its purpose and effect. The 30 day notice requirement does not apply to situations where the directors have determined that the rule is necessary to address an emergency that poses an imminent threat to public health or safety, or an imminent risk of substantial economic loss to the association. An emergency rule change in California is effective for a limited period of time that is specified by the directors up to a maximum of 120 days. The California statutes also specify a procedure that association members can follow in order to challenge or veto a rule that the directors have adopted or intend to adopt.

The process of adopting, amending, repealing and challenging homeowners’ association rules and regulations necessitates having familiarity with applicable state laws and the relevant provisions that are contained in the association’s Articles, Bylaws, CC&Rs, and existing Rules. Association directors that have not first considered the applicable laws and existing relevant provisions in their governing documents should not be taking action to adopt, amend or repeal rules. When dealing with these issues, a prudent course of action for the association’s directors would be to obtain input from the association’s legal counsel before taking the contemplated action.